Taiwan Semiconductor Manufacturing Company reported second-quarter net profit surged more than 77 percent year-over-year to a record NT$706.6 billion, as demand for advanced artificial intelligence processors from customers like Nvidia left the world's largest contract chipmaker with a sold-out order book through the remainder of 2026.
Revenue for the three months ended June 30 reached $40.2 billion, at the high end of the company's guidance and up 36 percent from the same period a year earlier. Gross margin expanded to 67.7 percent, above analyst expectations, while operating margin hit 60.3 percent. High-performance computing, the segment that includes AI chip production, accounted for 66 percent of wafer revenue, up significantly from prior quarters.
The results underscore TSMC's central position in the global AI supply chain. Advanced process nodes of 3 nanometers and 5 nanometers, along with the ramping 2-nanometer technology, represented 77 percent of total wafer revenue. The company said AI-related demand is extremely robust and expects the current sold-out environment to persist as a defining feature of the semiconductor industry throughout the year.
TSMC raised its full-year 2026 revenue growth forecast to slightly above 40 percent in U.S. dollar terms, up from a prior projection of more than 30 percent. Capital expenditure was increased to a range of $60 billion to $64 billion, from an earlier band of $52 billion to $56 billion, to fund capacity expansion for advanced nodes and chip packaging technologies like CoWoS that remain severely constrained.
July revenue provided further evidence of accelerating momentum. Monthly sales reached a record NT$467.58 billion, up 44.7 percent year-over-year and 5.6 percent from June. The figure reinforced management's commentary that AI spending continues to roar ahead despite broader macroeconomic jitters and concerns about the sustainability of infrastructure investment among hyperscalers.
For investors, the question is whether TSMC can expand capacity fast enough to meet demand without sacrificing the margins that have made it one of the most profitable manufacturers in the world. The company guided third-quarter revenue to between $44.6 billion and $45.8 billion, suggesting sequential growth of roughly 11 to 14 percent. With Nvidia, Apple, and AMD all competing for limited wafer starts, TSMC's pricing power appears secure for the foreseeable future.
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