Taiwan Semiconductor Manufacturing Co.: Strong capacity and tech ramp at steeper yield curve easing competition concern

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Taiwan Semiconductor Manufacturing Co.: Strong capacity and tech ramp at steeper yield curve easing competition concern

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Taiwan Semiconductor Manufacturing Co.

Strong capacity and tech ramp at steeper

yield curve easing competition concern

Maintain Rating: BUY | PO: 2,560 TWD | Price: 2,270 TWD

Strong 5/3nm scale limiting risk of major business loss 15 May 2026

We highlight takeaways from TSMC’s Taiwan technology symposium and reiterate Buy Equity

as we believe recent concerns are overdone (see our update post its US event). It targets

to expand its 5nm and 3nm capacity by 25% CAGR from ’22-27 while high equipment HaasResearchLiu Analyst>>

commonality, cross technology planning and AI productivity gains (e.g. tool idle time and Merrill Lynch (Taiwan)

chamber cleaning schedule optimization) allow efficient conversion. Based on our +886haas.liu@bofa.com2 2376 3727

estimate, its 3nm capacity should reach 190k/230k WPM by 4Q26/27 (vs. Samsung SF3 Mike Yang >>

or Intel 18A’s 20-25k WPM at low yield prioritized for captive products), limiting the Research Analyst

Merrill Lynch (Taiwan)

concern Apple’s M series chipsets will shift away requiring 15k+ WPM peak capacity. +886 2 2376 3729

mike.c.yang@bofa.com

N2/A16 strengthens technology and margins leadership Robert Cheng >>

Research Analyst

TSMC targets to grow N2 family capacity by 70% CAGR from ’26-28, with 1st year ramp Merrill Lynch (Taiwan)

delivering 45% more capacity vs. 3nm as it rolls out 5 fabs at once while reduces 20% +886 2 2376 3731

robert.cheng@bofa.com

technology transfer time. Although N2 is the 1st node using nanosheet technology, it has

Cathy Hsu >>

reached the targeted defect density levels 2 quarters ahead of 3nm. While it still takes a Research Analyst