Taiwan Semiconductor Manufacturing Co (TPE:2330) reported second-quarter revenue of NT$1.270 trillion, a 36.0% year-over-year increase, with June sales surging 67.9% from the prior year. However, the key metric for investors is the quarter-on-quarter growth of 12.0% from Q1 2026, which sets the stage for the company's upcoming earnings report and full-year outlook.
Using TSMC's planning exchange rate of NT$31.7 per dollar, Q2 revenue translates to approximately $40.08 billion, just $125 million below the high end of its $39.0 billion to $40.2 billion forecast. This means the revenue figure is largely locked in ahead of Thursday's earnings call, shifting attention to margins and guidance for the remainder of the year.
The 67.9% June growth is partly inflated by a low base effect, as June 2025 revenue had dropped 17.7% month-over-month. In contrast, June 2026 revenue rose 6.2% from May, indicating solid but more moderate sequential growth.
H2 Growth Target: Billion
Back in April, CEO C.C. Wei raised the 2026 dollar-revenue forecast to more than 30% and described AI demand as "extremely robust." Ben Barringer, head of tech research at Quilter Cheviot, noted that TSMC's chip plants were "running hot." This optimistic outlook, combined with 2025 revenue of $122.42 billion, sets a challenging bar for the second half of 2026.
To achieve 30% annual growth, TSMC's second-half revenue must reach approximately $83.17 billion, which would be 9.5% higher than the estimated first half and 24.5% above the year-ago period. This implies that while some slowdown is possible, AI chip orders cannot afford to weaken. The exact target will vary with the exchange rate TSMC reports.
Capacity Expansion and Competitive Landscape
TSMC is aggressively expanding its advanced packaging capacity to meet surging demand from Nvidia (NASDAQ:NVDA) and other AI clients. Taiwan's science minister Wu Cheng-wen confirmed that TSMC will build a third and fourth advanced-packaging plant in Chiayi, with the first already in mass production and the second set to start soon. These plants focus on chip-on-wafer-on-substrate (CoWoS) technology, which integrates processors and memory into a single module.
The capacity gap is a critical factor in TSMC's competition with Samsung Electronics (KRX:005930) and Intel (NASDAQ:INTC). Wei has called Intel a "formidable competitor" and emphasized that "there are no shortcuts"—new fabs take two to three years to build and another one to two years to reach full production. This leaves TSMC's lead intact for now, but rivals could capture orders if customers face shortages.
Market Reaction and Earnings Outlook
TSMC shares rose 1% in Taipei on Monday, extending their year-to-date gain to 57%. The company's quarterly revenue beat the LSEG SmartEstimate by just 0.5%, and analysts expect net profit to jump 58.8%. However, with the revenue beat being marginal, focus is squarely on Thursday's forecast to drive the next move.
TSMC has set its gross margin forecast at 65.5%-67.5%. If results miss that range, if second-half guidance falls short of the $83.2 billion mark, or if CoWoS growth slows, the growth narrative could be undermined. Currency fluctuations also pose a risk, as the $40.08 billion estimate is based on a planning rate rather than the actual average for the quarter.
