TSMC holds 2026 capex at $60bn to $64bn after Q3 revenue rises 41.2%

Q3 results and the fourth-quarter outlook

Third-quarter revenue of $46.72bn beat the $45.62bn consensus and rose 41.2% from a year earlier, the company said on its 15 October earnings call. Earnings per ADR were $4.60 against a $4.45 consensus.

TSMC guided fourth-quarter revenue to $52.3bn to $54.3bn, about 14% sequential growth at the midpoint, with gross margin of 65% to 67% and operating margin of 56.5% to 58.5%. Second-quarter gross margin was 67.7%, up 1.5 percentage points sequentially on cost improvements and higher utilisation at leading-edge nodes.

Full-year 2026 revenue growth is now expected at about 44% in US dollar terms, up from guidance of slightly above 40% given in July.

CFO Wendell Huang attributed margin pressure to the steep 2nm ramp and overseas manufacturing costs. Overseas plants take 2 to 4 percentage points off margins, and Huang expects a 3 to 4 point dilution in the latter part of the five-year expansion. TSMC has not said how much of that comes from Arizona specifically.

Huang said spending across 2026 to 2028 will be significantly higher than in the preceding three years. Revenue growth should outpace capex growth, he said, answering a UBS analyst's question on equipment inflation.

Arizona: $265bn across 12 facilities

TSMC added $100bn to its Arizona commitment in July 2026, lifting the total US pledge to $265bn. The figure has climbed in steps: $12bn when the project began in 2020, then $40bn, $65bn, $165bn and $265bn this July, according to TradingKey. The $65bn stage was backed by a $6.6bn US government grant under the Chips Act.

The Arizona footprint is expected to reach 12 fabrication and advanced packaging facilities plus a research and development centre. The first fab already runs 4nm-class mass production. Yields there are comparable to TSMC's Taiwan plants, and the second fab will take 3nm, with mass production scheduled for the third quarter of 2027, the company said on the call. About 30% of TSMC's capacity for 2nm and below could sit in Arizona once all projects are complete, TradingKey reported.

C.C. Wei has said the company expects to build "probably [an] additional four or more fabs" in Arizona. A US official familiar with the plans said the extra money would support four more chip plants, taking the US footprint to 10 fabrication plants and two packaging facilities, GuruFocus reported, citing that official.

The $265bn is a multi-year plan. Construction and output timing will be set by customer orders, AI demand and how quickly the local supply chain matures, according to TradingKey. The January 2026 US-Taiwan trade deal set at least $250bn in direct Taiwanese investment, and Taiwan's tariff rate was cut to 15% from 20%. Commerce Secretary Howard Lutnick called the July increase evidence of the administration's push to bring chipmaking onshore.

Packaging is the constraint

CoWoS capacity, not wafer production, is the binding constraint on how many AI accelerators Nvidia, AMD and the cloud providers can buy, according to Tech Times. TSMC's Jun He has said 5.5-reticle CoWoS is in mass production, with yields consistently above 98% across products from multiple AI customers and 99% on some. TrendForce, cited by TradingKey, estimates monthly CoWoS capacity at 120,000 to 140,000 wafers in 2026. TSMC has released no official capacity guidance. Advanced packaging, testing and reticle work take roughly 10% to 20% of the $60bn to $64bn capex budget.

GlobalFoundries agreed on 8 October to make CoWoS silicon interposers at its Malta, New York plant under a $2bn contract with an initial five-year term. Volume production is due from the first half of 2028. GlobalFoundries describes the plan as the first US-based silicon interposer supply site supporting advanced packaging, including embedded deep trench capacitors.

Taiwan capacity keeps expanding

TSMC has nearly 20 manufacturing facilities under development, 13 of them leading-edge and advanced packaging facilities in Taiwan, Wei said on the call. Management expects annual N2-family capacity to more than double in 2027. 2nm accounted for 8% of third-quarter wafer revenue, with A14 at risk production in 2027 and volume production in 2028.