Taiwan Semiconductor Manufacturing Company (TSM) Q1 2026 earnings summary

Executive summary

• First quarter 2026 revenue reached NT$1,134.10 billion (US$35.90 billion), up 35% year-over-year and 6.4% sequentially, driven by strong demand for leading-edge process technologies.

• Net income attributable to shareholders was NT$572.48 billion, a 59% increase year-over-year and 13.2% higher than the previous quarter.

• EPS was NT$22.08, up 58.3% year-over-year.

• Advanced technologies (7nm and below) contributed 74% of wafer revenue, with 3nm at 25% and 5nm at 36%.

• HPC platform revenue surged, now 61% of total revenue, with strong growth in smartphone and IoT segments.

Financial highlights

• Gross margin improved to 66.2%, up 3.9 percentage points sequentially and 7.4 points year-over-year.

• Operating margin rose to 58.1%, up 4.1 points from Q4 2025 and 9.6 points year-over-year.

• Net profit margin reached 50.5%, up 2.2 points from Q4 2025 and 7.4 points year-over-year.

• Free cash flow for Q1 2026 was NT$348.21 billion.

• Cash and marketable securities at quarter-end were NT$3,383.60 billion (US$106 billion).

Outlook and guidance

• Q2 2026 revenue expected at US$39.0–$40.2 billion, up 10% sequentially and 32% year-over-year at midpoint.

• Q2 gross margin guided at 65.5%–67.5%; operating margin at 56.5%–58.5%; tax rate around 20%.

• Full-year 2026 revenue growth expected above 30% in USD terms, driven by robust AI demand.

• Gross margin dilution of 2–3% expected from 2nm ramp and overseas expansion in early stages, widening to 3–4% in later stages.

• Management expects continued strong demand in high performance computing and smartphone platforms.