TSMC Prepares for a $40 Billion Quarter While Flexing Pricing Muscle Across the Board

TSMC's mid-July earnings report highlights record revenue near $40B and rare price increases on both advanced and legacy chips, fueled by AI demand and tight capacity.

Taiwan Semiconductor Manufacturing Co. heads into its mid-July earnings release with more than just its latest quarterly numbers on the line. The world’s largest chip foundry is simultaneously testing how far it can push prices across both leading-edge and legacy nodes, a rare move that underscores the depth of AI-driven demand.

The company has raised tariffs on manufacturing processes of 7 nanometers and below by 5% to 10%, capitalizing on a supply-constrained market where utilization rates for its newest production lines have topped 120%. Unlike the typical industry pattern, TSMC has also lifted pricing on older chip designs — a sign that capacity is tight across the board. Rival Samsung is taking an even more aggressive stance, reportedly hiking prices for 5nm and 4nm wafers by as much as 15%.

A near-$40 billion quarter in sight

Analysts expect TSMC to report second-quarter revenue of roughly $40 billion, a 32% year-over-year jump that would land at the upper end of management’s own guidance range of $39.0 billion to $40.2 billion. Combined sales for April and May already reached 827.7 billion Taiwan dollars, meaning June figures — due out early this month — will determine whether the company beats its forecast. Earnings per share are projected at about $3.80.

Shares have responded accordingly. The stock has gained roughly 41% since the start of the year and recently traded in the 382-384 euro range, just 9% below the 52-week high of 420.50 euros hit on July 1. The relative strength index stands at 50.6, a neutral reading that leaves room for either direction ahead of the results.

Margins face a near-term squeeze

Despite the pricing power, the outlook is not entirely smooth. The second half of 2026 will see the start of mass production for TSMC’s next-generation chip technology, a ramp that typically depresses profitability in its early stages. Combined with the cost of new fabrication plants abroad, the company’s gross margin is expected to slip into a range of 65.5% to 67.5% for the current quarter, with operating margin between 56.5% and 58.5%.

Meanwhile, state-backed Japanese rival Rapidus is plotting an aggressive pricing entry into the high-end segment, aiming to offer a credible alternative to TSMC by 2027. For now, however, the Taiwanese giant commands 73% of the global foundry market and controls an estimated 90% of advanced AI-chip fabrication — a position that gives it considerable leverage.

Insider confidence and long-term expansion

Ahead of the earnings report, TSMC’s management has signaled faith in the company’s trajectory. Chief executive C.C. Wei added 146 shares to his own holdings in early July, the latest in a string of insider purchases over recent months. While the volume is modest, the gesture reinforces a message of strength.

On the strategic front, TSMC continues to broaden its geographic footprint. Its Arizona project is on track, and a dedicated packaging facility is slated for completion by 2029. The company’s robust balance sheet and critical role in global infrastructure were recognized by S&P, which recently upgraded TSMC’s credit rating to AA-.

With June sales and the full quarterly report due in quick succession, investors will soon learn whether TSMC can sustain the momentum that has nearly doubled its stock price over the past twelve months. For now, the market waits — and the RSI suggests it is in no hurry to choose a direction.