After posting new high net profit in the first quarter, TSMC management projects 2Q26 revenue to land between $39.0 billion and $40.2 billion, representing a year-over-year increase of approximately 32% and a sequential gain of around 10%. On the profitability front, assuming an exchange rate of US$1 to NT$31.7, the company expects gross profit margins to range between 65.5% and 67.5%, while operating profit margins are anticipated to come in at 56.5% to 58.5%.
According to CFO Wendell Huang, gross margin is expected to improve further in the current quarter, supported by higher utilization and continued cost optimization, although partially diluted by overseas fab expansion. The effective tax rate is projected at around 20% for the quarter and 17%–18% for the full year.
Looking ahead, TSMC expects initial 2nm ramp-up in 2H26 to dilute gross margin by 2–3% for the full year. Overseas fab expansion is also expected to weigh on margins by 2%–3% in the near term, potentially widening to 3%–4% over time. Meanwhile, 3nm margins are projected to exceed corporate average levels in 2H26.
Notably, TSMC notes that its 2026 capital expenditure will focus on 5G, AI, and HPC, with capex expected to come in at the high end of the US$52–56 billion range.
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(Photo credit: TSMC)
Please note that this article cites information from TSMC.