TSMC continues to see strong demand from customers over multiple years.
TSMC continues to see strong demand from customers over multiple years.
Taiwan Semiconductor Manufacturing (TSM -2.28%) plans to spend $60 billion to $64 billion this year on new factories and equipment. That's a lot of cash going out the door, with capital spending totaling a third of trailing-12-month revenue. But for the world's largest chipmaker, it's a signal that more growth is coming.
On the Oct. 15 earnings call, CFO Wendell Huang tied spending to long-term demand from customers, including the emerging market for agentic AI -- autonomous software that completes tasks on its own. He also said spending from 2026 through 2028 should be significantly higher than in the previous three years.
TSMC is chasing demand. Third-quarter revenue hit a record $46.7 billion, up 41% year over year, and management expects fourth-quarter revenue of $52.3 billion to $54.3 billion. CEO C.C. Wei said the gap between demand and supply remains "quite big." Huang added that if TSMC executes, revenue growth should outpace the increase in capital spending.
This is TSMC's scale at work. Even with investment in equipment to expand chipmaking capacity, it reported a stellar 51.1% profit margin in the third quarter, up from 45.7% in the year-ago quarter.
TSM Taiwan Semiconductor Manufacturing
$412.61-$9.64 (-2.28%)
NYSE · As of 4:00 PM ET 10/16/26
Geopolitical risks in Asia remain. TSMC continues to invest in building new factories in Taiwan, while expanding overseas to diversify its operations. However, overseas plants in places like Arizona cost more to run and may weigh on future margins.
Still, the strong quarter and investment plans point to years of growth ahead, which makes the stock a buy for long-term investors. Taiwan Semiconductor stock is trading at 19 times 2027 earnings estimates, with the consensus estimate calling for earnings to grow 28% next year.
Averytin News Financial update.