TSMC (2330 TT, NT$2,470.00) - Capex hike as strong indicator

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TSMC (2330 TT, NT$2,470.00) - Capex hike as strong indicator

Taiwan Equity | Tech

Company Snapshot

Raising full-year guidance as expected

Due to robust AI demand, TSMC raised its full-year guidance again to 40%+ YoY, which is

in line with our expectation, implying 4Q26 revenue to be up another high-single digit QoQ.

Additionally, TSMC also raised its FY26 capex to US$60-64bn from the previous US$56bn

to support customers’ robust demand. As the management mentioned several times before,

TSMC’s capex is driven by customers’ demand and is always a leading indicator of the

company’s growth in the following years. TSMC also highlighted that capex in the following

years will be significantly higher than the previous years. Moreover, TSMC announced

another US$100bn in capex in Arizona to support several wafers for N2 and below

technologies as well as advanced packaging, likely four new fabs. With more intense capex

in the following years, we think there will be more N2 and N3 capacities available in 2027

and 2028. We currently estimate there will be 210-220kwpm for N3 and 120kwpm for N2

by the end of 2027. We will double-check and provide our updates on this.

Positive read on TSMC’s earning conference

TSMC’s earnings conference delivered a very comprehensive outlook for the overall AI

market and its future growth. Based on TSMC’s renewed guidance, we further raise our FY26

and FY27 earnings projections to NT$108.80 and NT$155.41, respectively. TSMC remains our

top pick in the Taiwan AI supply chain despite the market’s very high short-term

expectations before its print. We maintain our Buy rating with an unchanged target price of

NT$3,500.

How are we different?

Our updated FY26/27 EPS forecasts are NT$108.80 and NT$155.41 vs. the market consensus