Taiwan Semiconductor Manufacturing Corp (NYSE:TSM) beat on both revenue and EPS in Q1 2026, with gross margin of 66.2% coming in well above the 63-65% guidance range and marking a record for the company. The print extended TSMC’s streak to eight consecutive quarters of double-digit profit growth, and management raised full-year revenue growth guidance from approximately 30% to above 30% while moving CapEx to the high end of the $52-$56 billion range.
CEO CC Wei described AI-related demand as “extremely robust” and the structural story continues to strengthen. HPC including AI accelerators now drives 61% of revenue, up from just 29% in 2019, while smartphones have declined to 26%. A primary highlight from the call was the trajectory of 3nm margins, as management expects N3 gross margins to exceed the corporate average in the second half of this year. This shift should provide a significant tailwind as the node continues to scale. Inventory days rose to 80 days to support the early production buildup for 2nm silicon, though management warned that high depreciation costs during the initial stages of 2nm mass production could pressure margins in the near term. Regarding the supply chain, the company acknowledged Middle East exposure for specialty chemicals and gases but maintained that safety stock is secured through at least next quarter.
For more details, key highlights, and commentary, check out the high-level earnings summary.
