Taiwan Semiconductor Manufacturing Company Limited expects fourth-quarter revenue to rise about 58% year over year at the midpoint of its forecast, while new capacity investments are set to temper margins.
TSMC set its revenue outlook at $52.3 billion to $54.3 billion. The $53.3 billion midpoint would be about 58% above the $33.73 billion reported for the fourth quarter of 2025, according to the company’s earnings release on Oct. 15.
Third-quarter revenue reached NT$1.494 trillion, up 50.9% from a year earlier. In U.S. dollar terms, revenue was $46.72 billion, an increase of 41.2%. Net income rose 68.7% to NT$763.06 billion.
TSMC expects gross margin of 65% to 67% in the fourth quarter, with a 66% midpoint compared with 66.4% in the third quarter. Chief Financial Officer Wendell Huang said the midpoint decline reflects the 2-nanometer production ramp and costs at overseas fabs. Productivity gains and capacity optimization are expected to offset part of the pressure.
Huang put overseas-fab margin dilution at about 2% for full-year 2026 and said it could reach 3% to 4% in coming years. Chairman and CEO C.C. Wei said the company’s earlier estimate for AI accelerator revenue to grow at a mid-to-high-50% compound annual rate from 2024 through 2029 could be too low. “It probably will be higher,” he said, adding that the company’s measure excludes server CPUs.
TSMC cited sustained multiyear demand for 3-nanometer capacity and AI-related demand as reasons for expanding. The company described its current 3-nanometer buildout as a departure from its past practice of stopping additions to a process node once its targeted capacity was in place.
In July, TSMC pledged another $100 billion for Arizona projects. Wei said the investment would likely cover about four facilities combining logic fabs and advanced-packaging operations; the company discusses logic production for 2-nanometer-and-below technology separately from packaging. TSMC expects its second Arizona fab to begin volume production in the third quarter of 2027. It also plans two 3-nanometer fabs in Tainan, with production scheduled to begin in the first half of 2027 and the first half of 2028.
