TSM earnings — Tessara

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TSM earnings — Tessara | Tessara

TSMPost-callTSM · Q1 2026 · reported 10h ago

Net readTSMC's Q1 2026 call hardened nearly every supply constraint—N3 expansion, N2 ramp, advanced packaging, equipment availability, and custom AI silicon demand—while easing only mature-node capacity as legacy fabs wind down, signaling an increasingly bottlenecked leading-edge environment.

Reported

Revenue (USD)USD 35.9 billionslightly ahead of our first quarter guidance

Revenue (NT)8.4% sequentially increase

Gross margin66.2%exceeded the high end of the range by 120 basis points

Operating margin58.1%

EPSTWD 22.08

ROE40.5%

3nm wafer revenue contribution25%

5nm wafer revenue contribution36%

7nm wafer revenue contribution13%

Advanced technologies (7nm and below) wafer revenue contribution74%

HPC revenue contribution61%

Smartphone revenue contribution26%

CapEx (USD)USD 11.1 billion

Forward guidance

Revenue Guide (USD)USD 39.0 billion and USD 40.2 billion

Gross margin65.5% and 67.5%

Call takeawaysnovel signals from this call

N3 capacity expansion breaks historical precedent↑ bullish

“Historically, we do not add additional capacity to a node once it has reached its target capacity. However, as a foundry, our first responsibility is to provide our customers with the most advanced technologies and necessary capacity to unleash their innovations. Based on our assessment, to meet…”

Watch whether TSMC's N3 expansion timeline and yield ramp in Arizona and Japan can keep pace with demand, as any delay would extend the supply constraint window into 2028 and beyond.

Tesla Terafab threat acknowledged directly by CEOmixed

“Well, Gokul, actually, both Intel and Tesla, they are TSMC's customers. But again, they are our competitors, and we view Intel as our formidable competitor and do not underestimate them. But having said that, there are no shortcuts. The fundamental rules of the foundry game never change.”

Watch whether Tesla's Terafab initiative and Samsung partnership results in meaningful volume shifting away from TSMC, particularly for AI inference chips, over the next 12-18 months.

Middle East conflict introduces new supply cost risk

Forecast held ✓·p50 $34.90B → actual $35.52B (+1.8%)

What management said

↓TSMC's 3-nanometer node reaches margin crossover in H2 2026, indicating N3 yields and costs have matured to sustain corporate-average profitability — a key production maturity milestone.

·TSMC's N2 node begins initial mass production ramp in H2 2026 with 2-3% gross margin dilution, confirming early-stage yield and cost profile typical of a new technology ramp.

↑Geopolitical disruption in the Middle East is expected to raise prices for semiconductor manufacturing chemicals and gases, creating an upstream input cost constraint for TSMC.

↓TSMC's overseas fab expansion (Arizona, Japan, etc.) will dilute margins by 2-4% over the next several years, reflecting the cost premium of geographically diversified leading-edge capacity buildout.

↑TSMC guides Q2 2026 margin higher on rising utilization, indicating fabs are running at increasingly high capacity levels, partially offset by overseas fab dilution.

↑TSMC's inventory build reflects simultaneous N2 ramp-up and strong N3 demand, indicating capacity is being actively consumed across leading-edge nodes.

“Also, N3 gross margin is expected to cross over to the corporate average in second half 2026.”

— CFO

Generated Apr 18, 2026, 2:46 PM · research read-through, not price prediction