- Company name
- Taiwan Semiconductor Manufacturing
- Sector
- Semiconductor manufacturing
- About
- TSMC makes chips for other companies. It does not design its own chips. Customers like Nvidia, Apple, and AMD send TSMC their chip designs, and TSMC manufactures them. TSMC makes almost all of the world's most advanced chips, the kind used in AI processors and smartphones.
- Thesis
- The market still prices TSMC like a plain contract manufacturer, not like the company that makes almost every advanced AI chip. This differs from how it prices Nvidia or Broadcom, even as TSMC's own pricing power keeps growing. Press reports say TSMC raised 2026 wafer prices and plans a further rise in 2027 for advanced nodes. TSMC does not publish its prices. For the gap to close, TSMC must keep turning its bigger capital budget into revenue at this year's pace. Its costly new fabs in Arizona and Japan must also ramp up without further delay. Investors want proof that demand outside AI, in phones and PCs, holds steady while this buildout continues. A separate, harder problem is the discount tied to Taiwan-China tension. This piece is unlikely to close soon, since it depends on politics outside TSMC's control. The next data point is TSMC's Q3 2026 earnings call on October 15, 2026. If AI demand and pricing keep beating expectations over the next two to four quarters, the execution part of the gap can close, even if the geopolitical discount lasts for years.
- Risks
- TSMC's near-term growth depends on AI chip demand staying strong. A slowdown from any major customer would hit TSMC's revenue growth quickly, since a small number of large customers drive much of its business. In 2025, the largest customer gave 19% of revenue, the second largest gave 17%, and the top ten gave 78%. Press reports name Nvidia and Apple as the two largest.
Nearly all of TSMC's advanced chip production happens in Taiwan. Any disruption from geopolitical tension between Taiwan and China would be a major risk to the business.
TSMC is spending a record amount on new factories, including plants in Arizona and Japan. If AI demand slows before this spending pays off, profit margins could fall.
TSMC's pricing power depends on chip designers accepting higher wafer prices. If AI chip demand cools, customers could push back harder on future price increases, or shift some orders to lower-cost capacity at rivals like Samsung or Intel Foundry.
- Balance sheet
- Cash: NT$3,518.0B
Debt: NT$1,031.7B
Net cash: NT$2,486.3B
Interest cover: 246×
Debt due within 12 months: NT$167.4B
Ratings: S&P AA- (positive outlook), Moody's Aa3 (positive outlook)
TSMC has a large net cash position, and debt does not limit its choices: cash flow can pay for its record build-out and higher dividends. The main financial risk is the location of its plants in Taiwan, not its balance sheet. Debt is unsecured bonds plus NT$51.3 billion of unsecured bank loans (mostly in Japanese yen), and it does not include NT$36.9 billion of lease liabilities. Of the bonds, NT$554.8 billion are domestic Taiwan dollar bonds and NT$427.7 billion are overseas bonds. The parent guarantees the overseas bonds of its subsidiaries TSMC Arizona and TSMC Global. Cash includes NT$383.8 billion of short-term financial assets, and net cash was NT$2,486.3 billion. Interest cover uses finance costs in the first half of 2026. In the same half, operating cash flow of NT$1,482.3 billion paid for NT$846.8 billion of capital expenditure. S&P changed its outlook to positive on June 23, 2026, and Moody's changed its outlook to positive on August 28, 2026. Government grants in the United States, Japan, Germany and China also pay for part of the new plants, but TSMC received only NT$0.6 billion of grants in the first half of 2026.
As of 2026-06-30.
- Checkpoints
- Oct 15, 2026: Q3 2026 results: AI demand, margins and 2026 growth. Pending. Watch: Revenue that meets the more than 40% 2026 growth target with stable gross margin passes; a lower growth target or margin pressure from overseas fabs fails.
Jan 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2027 guidance with strong revenue growth and confirmed higher wafer prices passes; weak guidance or customer pushback on prices fails.
Q4 2027 (estimate): Second Arizona fab starts 3 nm volume production. Pending. Watch: Volume production at the second Arizona fab in the second half of 2027, with margin dilution inside guidance, passes; a delay or a larger margin hit than guided fails.
- Recent events
- 2026-10-08: TSMC reported September 2026 revenue of NT$511.9 billion, up 55% from a year earlier and down 0.6% from August. Third-quarter revenue was about NT$1.49 trillion, up about 50% from a year earlier. Revenue for January to September was NT$3,898.7 billion, up 41%.
2026-10-07: Elon Musk said on X that his companies will build and run the Terafab plant, and that TSMC may at most sublease part of it. TSMC's US-listed shares fell from their record over the next three days, to $453.31 on October 9, 2026.
2026-10-03: On October 3, 2026, Elon Musk said on X that TSMC and his Terafab chip plant project were in "just discussions." This followed an October 2 newsletter report that TSMC was studying a role in Terafab. TSMC made no announcement. On October 5, 2026, TSMC's US-listed shares closed at a record high of $485.80.
2026-09-30: Reuters reported that TSMC is studying a new investment in Texas, on top of its Arizona plans. TSMC declined to comment.
2026-09-10: TSMC reported August 2026 revenue of about NT$514.8 billion, up 53% from a year earlier and up 10% from July. Year-to-date revenue through August was up more than 39% from a year earlier.
2026-07-21: Nikkei Asia reported that TSMC plans to raise wafer prices by 5% to 10% from January 2027, with an extra 10% to 15% charge on AI and high-performance orders above committed volumes. TSMC does not comment on prices.
2026-07-16: TSMC reported Q2 2026 results. Revenue was US$40.2 billion, up 34% from last year in US dollars and up 36% in Taiwan dollars. Gross margin was 67.7%.
2026-07-16: Management raised the full-year 2026 revenue growth target to slightly above 40% in US dollars, from more than 30%. It raised the 2026 capital spending budget to US$60-64 billion, from US$52-56 billion.
2026-07-16: TSMC announced another US$100 billion investment in Arizona. This raises its planned Arizona investment to US$265 billion, for ten fabs, two advanced packaging plants and a research center.