TSMC Shatters Expectations with Stellar Start to the Year

TSMC US8740391003

The competitive landscape in semiconductors is shifting, and Taiwan Semiconductor Manufacturing Company (TSMC) is pulling ahead. As some pure-play chip designers show signs of weakness, the world's leading foundry has posted January revenue figures so strong they eclipse its own ambitious annual targets. This performance, coupled with aggressive capital expenditure plans, signals management's confidence in sustained demand rather than an impending market saturation.

TSMC's financial strength is immediately apparent in its January sales report. Revenue surged to approximately NT$401.26 billion, marking a substantial 36.8% year-over-year increase. This impressive jump significantly outpaces the company's stated annual growth target of 30% for 2026. Furthermore, sales rose by nearly 20% compared to the previous month of December. These results provide concrete evidence that the artificial intelligence-driven hardware boom is accelerating rather than slowing down.

This fundamental strength is being rewarded in the equity markets. TSMC shares gained 5% over a recent week, dramatically outperforming the broader semiconductor ETF (SMH), which advanced only 1.5% in the same period. Since the start of the year, the stock has recorded an increase of 20.6%. A notable sector divergence is at play: while equipment suppliers and manufacturers like TSMC and Applied Materials are gaining, chip designers such as Nvidia and Intel have recently faced pressure.

Aggressive Capital Allocation for Advanced Technologies

To meet the soaring demand, TSMC has outlined a massive capital expenditure (Capex) budget for 2026, projected to be between $52 and $56 billion. This represents an increase of up to 37% over the prior year. The majority of this investment—between 60% and 80%—is earmarked for developing cutting-edge process technologies. Key initiatives include the 2nm node, which entered volume production at the end of 2025, and the upcoming A16 (1.6nm) technology, scheduled for mass production in the second half of 2026.

Concurrently, the company is rapidly expanding its CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging capacity. This specialized method is a critical bottleneck in the production of AI accelerators. Reports indicate that capacity in this area is set to double during the current year to satisfy the requirements of major clients.

Confident Outlook and Shareholder Returns

During a recent investor conference, TSMC's management expressed strong confidence, forecasting nearly 30% revenue growth in U.S. dollars for 2026. This projection would see the company more than double the expected 14% growth rate of the overall foundry market. Additionally, shareholders will receive a cash dividend of NT$6.0 per share for the past fourth quarter, payable on July 9, 2026.

@ boerse-global.de | US8740391003 TSMC