TSMC's AI-Driven Growth
TSMC's May Revenue Soars 30% on Firm AI Demand, Projecting Years of Chip Shortages.
Anonymous
Key Points
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TSMC said May revenue was NT$416.98 billion, up 1.5% from April (in addition to being up 30.1% year over year).
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TSMC’s prior outlook for second-quarter sales was $31.4 billion to $32.4 billion, supported by “steady demand for its leading-edge process technology.”
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Techzine reported that TSMC’s CEO C.C. Wei’s warning that global chip supply will fall short “for years to come” aligned with remarks from Nvidia CEO Jensen Huang that Nvidia remains “supply constrained.”
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Techzine also said TSMC is “deliberately avoiding sharp price increases” despite demand pressure, prioritizing long-term customer relationships and predictable growth.
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The report noted TSMC delivered a record Q1 2026 result—its fourth consecutive record quarter—with first-quarter revenue rising 35% year over year.
TSMC posted May 2026 revenue of NT$416.98 billion — roughly $13.2 billion — up 30.1% from a year ago and 1.5% higher than April, according to Yahoo Finance. The result pushed the company's first five months of 2026 revenue to NT$1.96 trillion, a 30% gain over the same stretch in 2025.
The numbers confirm AI is now the engine powering TSMC's growth. High-performance computing, the category that includes AI chips for customers like Nvidia and Apple, made up 61% of total revenue in the most recent quarter. Yet TSMC shares slipped about 2% after the report as investors wondered how much AI optimism is already baked into the stock price.
AI Chip Demand Keeps Breaking Records Quarter After Quarter
TSMC just wrapped its fourth straight record quarter. First-quarter 2026 revenue hit NT$1.134 trillion, up 35.1% year over year, according to TradingView. The company has since raised its full-year 2026 growth forecast to above 30%. Second-quarter sales are expected to land between $31.4 billion and $32.4 billion — another potential record.
Advanced chip production is doing the heavy lifting. Chips built on nodes 7 nanometers or smaller — the most cutting-edge designs — account for 74% of TSMC's wafer revenue, GuruFocus reported. The 3nm node alone made up 25% of wafer sales. These are the chips inside AI servers and next-generation smartphones.
CEO Warns Chip Shortage Will Last 'Years to Come'
TSMC chief C.C. Wei did not sugarcoat the supply picture. At the company's annual meeting in early June, he said, "It will be a long time before we can meet customer demand." Nvidia CEO Jensen Huang echoed that view at Computex, saying "everything's in short supply because the demand is so high," according to TradingView.
TSMC is building faster than ever to close the gap. The company is now completing nine new fab phases every year — more than double the historic pace of four. Its 2026 capital spending budget runs as high as $56 billion. Still, Wei admitted that AI demand growth after 2023 "far exceeded expectations" and forced a complete rethink of expansion plans.
TSMC Holds Prices Steady to Protect Long-Term Partnerships
Even with customers lined up and capacity tight, TSMC is not hiking prices sharply. Wei addressed this directly, saying of rivals with 80% gross margins, "I envy their margins, but I would never do that." Yahoo Finance reported that TSMC is prioritizing stable, long-term relationships with major customers over short-term profit gains.
That strategy has trade-offs. TSMC does make small, measured price increases on its 3nm and 2nm nodes to protect a gross margin target of 60% to 67%. But it stops well short of the sharp hikes memory chipmakers have used. The approach keeps Apple and Nvidia loyal — and keeps TSMC at the center of the AI supply chain.
Non-AI Customers Getting Squeezed Out of Advanced Nodes
The AI boom is reshaping who gets access to TSMC's best chips. Hyperscalers — Alphabet, Amazon, Meta, and Microsoft — are projected to spend $725 billion on AI infrastructure in 2026 alone, according to Yahoo Finance. That spending locks up enormous chunks of TSMC's most advanced capacity, leaving little room for others.
Smaller customers and non-AI applications are already feeling the squeeze. Crypto mining firms, which once rushed to grab new chip nodes first, barely get a mention in TSMC's current revenue story. Apple has reportedly secured more than half of the initial 2nm production capacity for late 2026. Rivals like MediaTek and Qualcomm are competing for what remains, according to TradingView.
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