TSMC raises growth outlook as AI chip demand drives record quarter

Taiwan Semiconductor Manufacturing Company reported second-quarter 2026 revenue of $40.2 billion, a 36% jump year over year, and raised its full-year growth target to above 40% as AI demand continued to strain chipmaking capacity. Net profit rose 77.4% to NT$706.56 billion, while gross margin reached 67.7%, above the company’s guidance ceiling.

High-Performance Computing, driven by AI accelerators for cloud data centers, rose 20% sequentially and accounted for 66% of wafer revenue. Smartphones fell to 22%. Advanced nodes dominated sales, with TSMC’s 3-nanometer process contributing 30% of wafer revenue and 5-nanometer contributing 33%.

TSMC’s 2-nanometer process made its first meaningful commercial contribution at 3% of wafer revenue, but the ramp is expected to pressure margins. The company guided Q3 2026 revenue of $44.6 billion to $45.8 billion and gross margins of 65% to 67%.

CoWoS advanced packaging has become a critical bottleneck for AI chips, with lead times extending 52 to 78 weeks. TSMC also raised its 2026 capital expenditure budget to $60 to $64 billion and said total committed investment in Arizona now stands at approximately $265 billion.