Taiwan Semiconductor Manufacturing Company (TSM) investor relations material

Executive summary

• Q2 2026 revenue reached NT$1,270.38 billion (US$40.20 billion), up 12% sequentially and 36% year-over-year, driven by strong demand for leading-edge process technologies, especially 2 nm, 3 nm, and 5 nm nodes.

• Net income attributable to shareholders was NT$706.56 billion, up 23.4% from the previous quarter and 77.4% year-over-year.

• EPS was NT$27.25, a 23.4% increase sequentially and 77.4% higher year-over-year.

• AI-related demand remains extremely robust, with agentic AI and CPUs driving additional silicon demand.

• Full-year 2026 revenue growth is expected to be slightly above 40% year-over-year in USD terms.

Financial highlights

• Gross margin increased to 67.7%, up 1.5 percentage points sequentially and 9.1 points year-over-year, slightly ahead of guidance due to cost improvements and higher capacity utilization.

• Operating margin reached 60.3%, up 2.2 points from last quarter and 10.7 points year-over-year.

• Net profit margin was 55.6%, up 5.1 points sequentially.

• Cash and marketable securities stood at TWD 3.5 trillion ($110 billion) at quarter-end.

• Free cash flow was NT$287.36 billion.

Outlook and guidance

• Q3 2026 revenue is guided between $44.6 billion and $45.8 billion, up 12% sequentially and 37% year-over-year at the midpoint.

• Gross margin for Q3 2026 expected between 65%-67%; operating margin between 56%-58%.

• Full-year 2026 revenue growth projected slightly above 40% year-over-year in USD.

• Gross margin dilution expected from 2 nm ramp-up (3-4 percentage points) and overseas fabs (2-4 percentage points over several years).

• The company is evaluating the impact of IFRS 18, effective January 2027, on future financial reporting.