TSMC’s Q3 2026 earnings included a line from C.C. Wei that I’ve been waiting a few quarters to hear anyone say plainly: AI-related demand is “extremely robust and far above our supply capability,” and “we did not see any sign of slowdown.” The prior quarter was $46.72 billion in revenue, 2.0% above the top of TSMC’s $45.8 billion guidance, and the full-year growth forecast moved to about 44% in dollar terms.

The market fixated on gross margin. It slipped 1.3 points to 66.4% from the second quarter, which TSMC blames on dilution from the early 2nm ramp, and fourth-quarter guidance is 65% to 67%, so nobody is promising a rebound. According to a summary of the call, CFO Wendell Huang also said the margin drag from overseas fabs will widen to 3 to 4% in the coming years, up from about 2%. Two nanometers already accounts for 8% of wafer revenue in its first year of volume production. I wrote in September about TSMC raising its 2nm capacity guidance; this quarter is the first time I can see what that costs.

High-performance computing is 68% of revenue now. Smartphones are 21%, and management was careful about the consumer side, citing rising component costs and macro uncertainty and saying it is planning 2027 prudently. I’d read that next to the reported 10% Snapdragon X price increase, which a Taiwanese supply-chain report put down to TSMC wafer costs. That report is unconfirmed; the call at least shows which end of the chain is feeling squeezed.

Capex stays at $60 billion to $64 billion for 2026, with spending from 2026 to 2028 described as significantly higher than the prior three years. How many fabs that buys depends on which summary you read: the transcript recap says about 20 in progress; another says nearly 25. A day earlier, ASML said its capacity won’t meet demand in 2027 or 2028, and hearing both in 24 hours makes it hard for me to file this under one executive’s mood.

Wei also said the U.S. buildout could reach past Arizona into Texas, and Nikkei reports that talks over Elon Musk’s Terafab project continue. That is all TSMC said. I covered the Terafab talks and what they do to Intel’s 14A order last week, and nothing on this call settles it.

Sources

Focus Taiwan, TSMC raises 2026 sales growth forecast to 44%, leaves capex unchanged, October 15, 2026
Nikkei Asia, TSMC eyes Texas and Musk Terafab project for US expansion, October 15, 2026
XenoSpectrum, TSMC Q3 Revenue Tops Guidance, but 66.4% Gross Margin Stays Within Range, October 15, 2026
The Motley Fool via The Globe and Mail, TSMC (TSM) Q3 2026 Earnings Call Transcript, October 15, 2026
investingLive, TSMC profit jumps nearly 70% on AI demand, but margin outlook weighs on shares, October 15, 2026
BigGo Finance, TSMC Lifts 2026 Growth Target to 44% as AI Demand ‘Far Above’ Supply, October 15, 2026