Preview|TSMC 26Q2: Expect Another Beat-and-Raise

Q2 and Q3 Gross Margin to Beat Market Expectations

We expect Q2 gross margin of 68.4%, above the company's 65.5-67.5% guidance, and Q3 gross margin of 69.9% versus the 68% consensus. A favorable product mix and a heavy volume of rush orders should keep margins ahead of market expectations.

TSMC Likely to Raise 2026 Revenue Guidance; We Raise 2027 and Introduce 2028 Estimates

AI/HPC demand still far exceeds supply. We expect TSMC to raise its 2026 full-year revenue growth guidance to 35%, with the final number potentially landing close to 40%.

We now expect TSMC's advanced-node capacity expansion to accelerate in 2027, partly due to ASML's ramping up EUV capacity. With demand still outrunning supply, we raise our 2027 revenue estimate from NT$6.7tn to NT$7.0tn and introduce a 2028 forecast of NT$9.2tn.

On pricing, we estimate TSMC will raise advanced node prices by 5-10% in early 2027, not in 3Q26.