Down 3.01% on the day, from a prior close of $472.20
6.05% below the 52-week high of $487.47
52-week range $266.82 to $487.47 (intraday)
A quarter that landed at or above its own guidance, and a share price that fell 5.03% in the two sessions after it. No filing explains the fall. This note follows one question through the numbers. Does demand keep TSMC's fabs loaded while it builds more of them?
All price-dependent figures use the regular NYSE session close of October 8, 2026. No pre-market or after-hours prices are mixed in. Fundamentals are from the 2Q26 earnings release, the 2Q26 Management Report and the Form 6-K filings, because TSMC is a foreign private issuer and does not file 10-Q reports. Market data from StockAnalysis.
The story in six links
The numbers in this note hang on one chain, and each link leads to the next. The chapters after it show the evidence for each link and where it is weak.
- Much of a fab's cost is fixed, full or half empty.TSMC builds chips that customers design, and its factories carry large fixed costs. A full fab spreads those costs over more wafers than a half-empty one. This is a general mechanism, tested in the links below.
- Sales growth turned into bigger profit growth.Year over year, revenue rose +36.0% and net income +77.4%, helped by a one-off gain. Against 1Q26, of each extra NT$100 of sales about NT$79 reached operating income. Management credits the gross margin rise to cost improvements and higher utilization, without sizing either.
- Building more capacity costs a great deal of cash.Capital expenditure rose +41.4% on the quarter while operating cash flow rose +12.1%, so free cash flow fell 17.5%. The 2026 budget is now US$60B to US$64B, and as a general mechanism today's spending becomes tomorrow's depreciation.
- The next quarter already shows the trade.Gross margin is guided to 65% to 67%, below the 67.7% just reported, which the CFO tied mainly to the ramp of the new 2nm node. Revenue is still guided up about 12%, so profit can rise while margin slips.
- A few customers decide whether the fabs stay full.In 2025 the two largest customers made up 36% of revenue and the ten largest about 78%. As a general mechanism, that gives TSMC visibility and also makes utilization depend on a few order books.
- The share price is the last link.At about 33.0x trailing earnings, investors pay for profit already earned. Whether that is high or low depends on whether the leverage in link 2 continues. Why the stock fell after the report is not established by any filing.
Link 1 · The machine what TSMC sells and why a full fab matters
What does TSMC actually sell, and what makes its profit swing?
TSMC manufactures semiconductors that its customers design. According to the company profile, it pioneered the pure-play foundry model with an exclusive focus on manufacturing customers' products. It was established in 1987 by Dr. Morris Chang, and its American depositary shares have traded on the NYSE since October 8, 1997, with one ADS representing five ordinary shares. TSMC reports in NT dollars and also publishes US dollar revenue.
The business model matters more than the history. Customers choose what to order. TSMC chooses which technologies to build and how much capacity to commit years ahead. A fab carries large fixed costs, so it earns the most when it is full and running a technology customers will pay for. The same fixed costs weigh on margin when loading falls or a new node is still ramping. That is a general mechanism and the rest of this note tests it against what TSMC reported.
Two mix figures from 2Q26 are worth knowing early. High performance computing made up 66% of net revenue and smartphone 22%. Technologies at 7nm and below made up 77% of wafer revenue, with 2nm at 3%, 3nm at 30%, 5nm at 33% and 7nm at 11%. The first split is a share of total revenue and the second a share of wafer revenue only. A smartphone chip and an HPC chip can both be made on 3nm, so the two splits overlap and should not be added or matched. HPC is also a broad platform and not an AI revenue figure, even though management called AI demand extremely robust.
If a full fab earns disproportionately, then 2Q26 should show profit growing faster than sales. It does, although that alone does not prove utilization was the reason.
Sources, TSMC company profile, TSMC investor FAQ, the Form 20-F for 2025 and the 2Q26 Management Report.
Link 2 · The payoff why profit grew faster than sales
Did the quarter actually show the fixed-cost effect?
The reported results are consistent with it. Each line of the income statement grew faster than the one above it. Revenue rose 36.0% on the year, gross profit 57.2%, operating income 65.4% and net income 77.4%. Gross margin rose 9.1 points to 67.7%, and operating expenses grew about 17.1% against revenue growth of 36.0%.
| Line item | 2Q25 | 2Q26 | YoY |
|---|---|---|---|
| Revenue | 933.79 | 1,270.38 | +36.0% |
| Gross profit | 547.37 | 860.31 | +57.2% |
| Operating income | 463.42 | 766.60 | +65.4% |
| Net income, parent | 398.27 | 706.56 | +77.4% |
Against 1Q26, TSMC sold NT$136 billion more and kept NT$108 billion of it as operating profit. Out of each extra NT$100 of sales, about NT$79 landed in operating income.
That is operating leverage. Cost of revenue rose about 7.1% and operating expenses about 5.3% while sales rose 12.0% (calculated), so almost four fifths of the extra sales became operating profit. The documents do not split the gain between utilization, cost improvement, mix or price. The same leverage hurts when sales stall, since the costs stay in place.
| Item | Change | Per NT$100 of extra revenue |
|---|---|---|
| Revenue | +136.28 | 100 |
| Gross profit | +109.01 | 80 |
| Operating expenses | +4.97 | -3.6 |
| Other operating income | +3.59 | +2.6 |
| Operating income | +107.63 | 79 |
What drove the margin step is partly known and partly not. For gross margin, up 1.5 points from 66.2% to 67.7%, the Management Report names cost improvements and higher capacity utilization, partly offset by dilution from the overseas fabs. The CFO said the same on the call. The documents do not say how much each factor contributed, and they do not credit technology mix or price increases, so this note does not either.
Sales also grew faster than volume. Wafer shipments rose 3.9% on the quarter and 16.6% on the year, against revenue growth of 12.0% and 36.0%. Dividing the quarterly growth rates gives about 7.8% more revenue per shipped equivalent wafer (1.120 / 1.039, calculated). This is not a selling price, because revenue includes items that are not wafer shipments, and TSMC does not disclose an average selling price. It does show that the quarter was not only a volume story.
Net income includes NT$63.20 billion of disposal and mark-to-market gains on VIS shares. The CFO put the EPS contribution at NT$2.24 of the NT$27.25 reported, about 8.2%. Taking the gain out leaves net income of about NT$648.5 billion, EPS of about NT$25.01 and a net margin of about 51.0%, against 50.5% in 1Q26. Year-over-year net income growth falls from 77.4% to about 62.8%. All of this is calculated. The NT$58.1 billion removed is the CFO's NT$2.24 times 25.932 billion weighted shares, the amount attributable to shareholders, because TSMC does not report the after-tax effect. Part of the gain is a non-cash remeasurement of the retained VIS stake to fair value (financial statements, note 13).
An excluding-VIS figure is still not recurring earnings. Other operating income of NT$5.27 billion includes insurance benefits from the April 2024 earthquake, with claims concluded in 2Q26 at a cumulative net gain of about NT$4.3 billion. Other operating income as a whole is about 0.7% of operating income (5.27 / 766.60), and the documents do not say how much of the 2Q26 amount was insurance, so operating margin is shown as reported.
Sources, 2Q26 Management Report, 2Q26 Form 6-K, the 2Q26 call transcript and the 2Q26 consolidated financial statements (notes 13 and 34). Ratios and differences are calculated from these figures.
So the machine pays off. The next question is what it costs to build the next round of capacity.
Link 3 · The bill what building more capacity costs
Where does all that profit go?
A large part goes straight back into new capacity. Operating cash flow rose NT$84.39 billion on the quarter (783.36 less 698.97, up 12.1%) while capital expenditure rose NT$145.24 billion (496.00 less 350.76, up 41.4%). The extra spending exceeded the extra cash by NT$60.85 billion, which is exactly the fall in free cash flow (348.21 less 287.36, down 17.5%).
| Quarter | Operating cash flow | Capex | Free cash flow |
|---|---|---|---|
| 2Q25 | 497.07 | 297.22 | 199.85 |
| 1Q26 | 698.97 | 350.76 | 348.21 |
| 2Q26 | 783.36 | 496.00 | 287.36 |
Cash generation did not weaken. The free cash flow dip comes entirely from higher spending.
Operating cash flow was about 62% of revenue in both quarters (61.6% and 61.7%). Capital expenditure moved from 30.9% to 39.0% of revenue, and the free cash flow margin fell from 30.7% to 22.6%. These are single-quarter ratios and are not a basis for a full-year estimate, since capital spending is lumpy.
Spending and depreciation are different things, and they should not be added together. Capital expenditure is cash paid when equipment is bought. Depreciation and amortization spreads the cost of earlier purchases through the income statement without cash in the period, and it rose to NT$198.54 billion in 2Q26 from NT$165.45 billion in 1Q26, up 20.0% (calculated). As a general mechanism, today's spending reaches profit later through depreciation, and it pressures margin unless revenue per unit of capacity keeps pace. Gross margin rose in 2Q26 despite the higher charge, which fits the higher utilization management cited, although the documents do not quantify it.
Working capital absorbs cash as well. Inventory days rose by 7 to 87 and receivable days by 3 to 29. The Management Report attributes the inventory increase primarily to the N2 (2nm) ramp. In general, a ramp needs wafers in process and stock before revenue is recognized. Higher inventory days are not proof of weak demand by themselves, but they would deserve attention if they stayed high after the ramp or if orders slowed.
The balance sheet can carry this. Net cash of NT$2,486.33 billion (cash and marketable securities of NT$3,518.01 billion less interest-bearing debt of NT$1,031.68 billion) is about 5.0 times 2Q26 capital expenditure. Cash on hand gives flexibility, and it does not guarantee that the new capacity earns an attractive return. That depends on customer demand, execution and pricing.
Sources, 2Q26 Management Report (pp. 4 to 5), the 2Q26 presentation for the free cash flow line and the 2Q26 Form 6-K.
The spending is not a one-off. Management has already told investors what comes next, and it shows up in the guidance.
Link 4 · The next step guidance, a forecast and not a result
If spending and ramp costs rise, what does management expect the next quarter to look like?
Every figure in the panels is management guidance. The current figures were issued on July 16, 2026, and the two prior rows show earlier guidance. At the revenue midpoint of US$45.2 billion, 3Q26 would be about 12.4% above 2Q26 and about 36.6% above 3Q25 (calculated from reported revenue of US$40.20 billion and US$33.10 billion). Management describes this as roughly 12% sequential and 37% year-over-year growth.
On the guidance, margins fall and operating profit still rises, because revenue grows faster than margin shrinks.
As an illustration only, the guidance midpoints give 3Q26 revenue of about NT$1,446.4 billion (US$45.2 billion at NT$32.0) and an operating margin of 57%, for operating profit of about NT$824.5 billion. That is 7.5% above the NT$766.60 billion reported for 2Q26. In US dollars it is US$25.76 billion against US$24.26 billion (766.60 / 31.60, the 2Q26 average rate), up 6.2%. The corners of the ranges give US dollar operating profit between 3.0% and 9.5% above 2Q26. This is a calculation from guidance assumptions, not reported profit or a TSMC forecast, and a range midpoint is a convenient illustration and not a probability estimate.
Why the margin is guided lower
The CFO tied the lower guide mainly to the steep N2 ramp, which he put at roughly 3 to 4 points of dilution before partial offsets from strong leading-edge demand and cost reductions. Management also expects dilution from the overseas fabs of 2 to 3 percentage points in the early stages, widening to 3 to 4 later (2Q26 call). As a general industry pattern, a new node works like a sequence. Customers commit designs, the fab ramps and works on yield, equipment is bought before volume revenue arrives, and only then does the node contribute a meaningful share of sales. N2 was 3% of wafer revenue in 2Q26. Spending and ramp costs come first and the benefit, if utilization and pricing hold as the node matures, comes later. The filings do not quantify that timing for N2.
| Node | Status per TSMC |
|---|---|
| N2 (2nm) | volume production started 4Q25, 3% of 2Q26 wafer revenue |
| N2P and A16 | volume scheduled 2H26, no revenue yet |
| A14 | risk production 2027, volume 2028 |
| A13 and A12 | volume scheduled 2029 |
Volume production is a company status, risk production is a trial stage and a scheduled date is a plan, and none of them is revenue or evidence of future profitability. No official CoWoS or SoIC capacity figure was found in the sources checked, and supply chain estimates are not used here.
The capital budget closes the loop
TSMC raised its 2026 budget to US$60 billion to US$64 billion from US$52 billion to US$56 billion guided in January, and the call transcript notes an April indication of closer to US$56 billion. Capital expenditure in 1H26 was US$26.80 billion (11.10 and 15.70), so the budget midpoint leaves about US$35.2 billion for 2H26, around US$17.6 billion a quarter against US$15.70 billion in 2Q26 (arithmetic from the budget, not a forecast). Higher spending is not bullish or bearish by itself. It supports the case if the added capacity is filled at the utilization and pricing behind 2Q26 margins, and it weighs on the case if demand or ramp timing falls short while depreciation rises.
Guidance has held up on the evidence of one quarter. The April guide for 2Q26 was met or beaten, as the table in the appendix shows.
Sources, 2Q26 Form 6-K, 2Q26 presentation, 1Q26 Form 6-K, 4Q25 Form 6-K, the 2Q26 call transcript and the 4Q25 call transcript for roadmap timing.
Everything so far depends on one thing, which is whether demand keeps filling the factories. Demand comes from a small group of customers.
Link 5 · The hinge who keeps the fabs full
How secure is the demand that fills the fabs?
TSMC does not name customers and does not publish revenue shares by customer in its quarterly reports. The latest revenue-based disclosure is the Form 20-F for 2025, which reports shares by rank. The largest customer accounted for 19% of net revenue in 2025 against 22% in 2024 and 25% in 2023. The second largest accounted for 17%, up from 12% and 11%. The ten largest customers together accounted for approximately 78%, up from 76% and 70%.
| Customer rank | Share of revenue | Cumulative |
|---|---|---|
| Largest customer | 19% | 19% |
| Second largest | 17% | 36% |
| Customers 3 to 10, calculated | 42% | 78% |
| All other, calculated | 22% | 100% |
The same concentration that helps TSMC plan years ahead also makes utilization depend on a few order books.
As a general mechanism, a few large customers planning ahead give TSMC clearer demand, which supports committing billions to capacity in advance. A change in one or two customers' orders would also move utilization, and utilization drives margin for the reasons in link 2. Concentration alone says nothing about default risk, and the 36% and 78% shares are full-year 2025 figures and not 2Q26.
The quarterly view is the platform mix. High performance computing rose to 66% of net revenue in 2Q26 from 60% a year earlier, while smartphone fell to 22% from 27%. A share is not an amount. On the quarter the Management Report gives HPC revenue up 20% and smartphone down 4%, against total revenue up 12.0%, so HPC's share rose and smartphone's fell. A falling share can also sit beside rising revenue when the whole business grows faster. The 2Q26 financial statements show a different measure, with the ten largest customers at 84% of accounts receivable at June 30, 2026, the same as at December 31, 2025. That shows who owed TSMC money on that date and is not a revenue share.
Sources, Form 20-F for 2025, risk factors section, the 2Q26 consolidated financial statements and the 2Q26 Management Report for the platform table.
With the chain in place, the last step is the price. It shows what investors are paying for.
Link 6 · The price what 33 times earnings pays for
What did the stock do after the report, and what is the multiple really betting on?
The reaction
TSMC reported on July 16, 2026, Taiwan time. The earnings call started at 2:00 a.m. ET and the Form 6-K was accepted by the SEC at 7:45 a.m. ET, before the NYSE open, so July 16 was the first reaction session. The shares closed at $419.48 on July 15, $409.74 on July 16 (down 2.32%) and $398.37 on July 17 (down 2.77%). That is a fall of $21.11, or 5.03%, over the two sessions (calculated).
A price reflects what investors expected as well as what the company reported, and what caused the move cannot be read out of a filing. The observable inputs are below. Their relative weight is not established by the data, so none of them is presented as the cause.
-
Fact
The quarter landed at or above guidanceRevenue of US$40.20 billion matched the top of the guided US$39.0 billion to US$40.2 billion range. Gross margin of 67.7% and operating margin of 60.3% were above the guided ranges of 65.5% to 67.5% and 56.5% to 58.5%.
-
Fact
The cost side of the chain movedThe 2026 capital budget was raised, free cash flow fell, and the 3Q26 gross margin guide is below the 2Q26 result. These are links 3 and 4.
-
Fact
Earnings included a one-off gainThe VIS gain added NT$2.24 to 2Q26 EPS of NT$27.25. This is the caveat to link 2.
-
Reading
One plausible way to read itMedia coverage pointed to high expectations going in, the higher capital budget, weaker free cash flow and margin dilution from the 2nm ramp. All of these are consistent with a decline after a strong print, and most sit on the cost side of the chain. None can be isolated as the cause from public data, and this reading is not established fact.
The multiple
The trailing multiple is calculated from the four reported quarterly EPS figures per ADR unit (US$2.92, 3.14, 3.49 and 4.31, summing to US$13.86) and the October 8 close. That gives about 33.0x on an IFRS basis, as TSMC reports under Taiwan-IFRS and not GAAP. Taking out the VIS gain per ADR unit (about US$0.35) leaves US$13.51 and a multiple of about 33.9x. The excluding-VIS multiple is higher only because its denominator is smaller, so it is a sensitivity and not a corrected valuation. Full inputs are in the appendix.
Whether a multiple of 33 is high or low depends on the whole chain. The fabs would have to stay loaded, the margin dilution from 2nm would have to fade and the new capacity would have to earn its cost.
The inverse is an earnings yield of about 3.0% (1 / 33.04, calculated), which is what the shares pay on profit already earned. Whether that is high or low depends on whether earnings can be repeated or grown, and this note does not infer a growth rate from the price, since that would need an explicit model.
Where consensus sits
Strong Buy, 21 analysts
$555.01
$440 to $700
approx. +21.2%
Rating, analyst count and target all come from the same provider, so the upside figure is internally consistent. The lowest target of $440 is 3.9% below the close and the highest of $700 is 52.8% above it. Implied upside is the gap between an average target and one reference price. It is not an expected return, and targets are set by different analysts at different dates. MarketBeat shows a different consensus of Buy from 16 analysts with an average target of $524.89, roughly +14.6% against the same close. The two are not combined.
Sources, StockAnalysis TSM forecast page, data from S&P Global, retrieved October 9, 2026 with analyst data last updated October 5, 2026, Nasdaq historical quotes for the July closes, 2Q26 earnings release and media views from Indmoney and Cryptobriefing. Media explanations are third-party interpretation. Multiples are calculations from reported figures and are not an opinion of TheValueTrader.
What would change the picture
If the whole story hangs on the fabs staying full, what are the two ways it ends?
The fabs stay full
- Leverage keeps working3Q26 revenue lands in the guided range, shipments grow with it, and operating income beats NT$766.60 billion even with lower margins.
- The 2nm dilution proves temporaryGross margin lands inside the 65% to 67% guide and the stated reasons are the N2 ramp and not weaker loading.
- The balance sheet funds itNet cash of NT$2,486.33 billion, about 5.0 times 2Q26 capex, is ample cover for the higher budget. That is flexibility, not a return.
- Mix points at the strongest demand7nm and below was 77% of wafer revenue and HPC 66% of net revenue, and management calls AI demand extremely robust.
Cost arrives before demand
- Margins step down for longerIf ramp costs last or demand softens, utilization will not offset them. Gross margin and operating margin are guided to 65% to 67% and 56% to 58%, below 67.7% and 60.3%.
- Capital intensity keeps risingCapex was 39.0% of 2Q26 revenue, depreciation rose 20.0% on the quarter, and returns depend on filling the new capacity.
- A few orders move everythingTwo customers were 36% of 2025 revenue. A change in their orders would move utilization and with it margin.
- Reported growth flatters the baseThe VIS gain was about 8.2% of 2Q26 EPS and insurance benefits sit in operating income. The tax charge pulled the other way, at 18.1% of pre-tax income against 16.8% in 1Q26, which the Management Report attributes mainly to tax on undistributed retained earnings.
What to read in the October 15 report
TSMC schedules its 3Q26 results call for Thursday, October 15, 2026 at 2:00 a.m. ET (14:00 Taiwan time), according to the company investor relations calendar. Everything in this note predates that report. Each item below tests one link of the chain, and no threshold is implied for any of them.
- Link 2Utilization and gross marginGross margin against the 65% to 67% guide and the reasons given, any utilization comments, and non-operating items, so earnings can be judged without the one-offs.
- Link 3Spending and cashCapital expenditure with free cash flow and depreciation, inventory and receivable days, and any change to the 2026 capital budget or growth guide.
- Link 4The rampThe 2nm share of wafer revenue, now 3%, and the margin dilution attributed to it.
- Link 5Demand mixPlatform growth rates, the closest quarterly view of where demand comes from.
What this note does not know
The chain connects reported figures to margin, leverage and cash, and that part is company-specific evidence. The link from today's capacity to future returns is a general mechanism that the figures do not yet show. The cause of the share price fall is not established. No utilization rate is given in the sources checked, only management's comment that utilization was higher, so how full the fabs are is not known. The split of the margin rise between utilization, cost improvement and overseas dilution is not disclosed. Yields, node-level margins and advanced packaging capacity are not disclosed in the sources checked. An excluding-VIS figure removes one disclosed item and leaves others in, and the comparison periods have not been adjusted in the same way, since 2Q25 may contain items this note has not examined. The Taipei close, USD/TWD rate and Taipei one-day move used in the appendix are third-party figures that were not checked against TWSE or central bank records.
Appendix full data for checking the chain
The detail below supports the chapters above. Open any block to see the full table or calculation.
A. Full 2Q26 scorecard
| Metric | 2Q26 reported |
|---|---|
| Revenue, NT dollars | NT$1,270.38Bup 12.0% QoQ, up 36.0% YoY |
| Revenue, US dollars | US$40.20Bup 12.0% QoQ, up 33.7% YoY |
| Gross profit and margin | NT$860.31B, 67.7%1Q26 66.2%, 2Q25 58.6% |
| Operating income and margin | NT$766.60B, 60.3%up 16.3% QoQ, up 65.4% YoY |
| Net income, parent | NT$706.56B, 55.6% marginup 23.4% QoQ, up 77.4% YoY, includes VIS gain |
| Diluted EPS | NT$27.25, US$4.31 per ADR unit1Q26 NT$22.08, 2Q25 NT$15.36 |
| Operating cash flow | NT$783.36B1Q26 NT$698.97B |
| Capital expenditure | NT$496.00B, US$15.70B1Q26 US$11.10B |
| Free cash flow | NT$287.36B1Q26 NT$348.21B |
| Wafer shipments | 4,336 thousand 12-inch equivalentup 3.9% QoQ, up 16.6% YoY |
The bridge from revenue to net income, in NT$ billion, runs as follows. Revenue 1,270.38 less cost of revenue 410.07 gives gross profit of 860.31. Less operating expenses of 98.98 and plus other operating income of 5.27 (net deduction 93.71) gives operating income of 766.60. Non-operating items add 95.83, and tax and minority interest take 155.87 (income before tax of 862.43 less net income of 706.56), leaving net income of 706.56. Cost of revenue, the net operating deduction and the tax line are calculated from reported figures.
B. Margins and growth over time
| Measure | 1Q26 | 2Q26 | Change |
|---|---|---|---|
| Revenue, NT$ | 1,134.10B | 1,270.38B | +12.0% |
| Operating expenses, NT$ | 94.01B | 98.98B | +5.3% |
| Gross margin | 66.2% | 67.7% | +1.5 pp |
| Operating margin | 58.1% | 60.3% | +2.2 pp |
| Net profit margin | 50.5% | 55.6% | +5.1 pp |
The net margin step of 5.1 points is larger than the operating step of 2.2 points because 2Q26 non-operating items rose to NT$95.83 billion from NT$28.83 billion, and NT$63.20 billion of that was the VIS gain. The VIS gain enters below operating income and does not affect gross margin. The Management Report places the earthquake insurance benefit in other operating income, but the original losses were booked partly in cost of revenue (financial statements, note 34), so it is not disclosed whether any of the benefit reached gross margin.
| Quarter | Revenue US$ | YoY US$ | YoY NT$ |
|---|---|---|---|
| 3Q25 | $33.10B | 40.8% | 30.3% |
| 4Q25 | $33.73B | 25.5% | 20.5% |
| 1Q26 | $35.90B | 40.6% | 35.1% |
| 2Q26 | $40.20B | 33.7% | 36.0% |
US dollar growth stayed between 25.5% and 40.8% across the last four reported quarters, without a steady path in either direction. TSMC guides in US dollars, so that basis is the main one. The NT dollar rates differ because the average exchange rate moved.
C. Guidance against result, and platform mix
| Measure | Guided | Reported |
|---|---|---|
| Revenue | US$39.0B to US$40.2B | US$40.20B |
| Gross margin | 65.5% to 67.5% | 67.7% |
| Operating margin | 56.5% to 58.5% | 60.3% |
| Exchange rate | NT$31.7 per US$1 | NT$31.60 average |
| Platform | 2Q26 | 1Q26 | 2Q25 |
|---|---|---|---|
| High performance computing | 66% | 61% | 60% |
| Smartphone | 22% | 26% | 27% |
| Internet of Things | 5% | 6% | 5% |
| Automotive | 4% | 4% | 5% |
| Digital consumer electronics | 1% | 1% | 1% |
| Others | 2% | 2% | 2% |
Applying the rounded shares to NT dollar revenue gives smartphone revenue of roughly NT$279 billion in 2Q26 against NT$252 billion in 2Q25, up about 11% (estimate). Because the shares are rounded to whole percentages, the true figure could lie anywhere from about 6% to 16%, so this only illustrates that a falling share can sit beside rising revenue.
D. Price range and valuation math
| Reference point | Price | Position in range |
|---|---|---|
| 52-week low, Nov 21, 2025 | $266.82 | 0% |
| Close, Oct 8, 2026 | $457.99 | 86.6% |
| Prior close, Oct 7, 2026 | $472.20 | 93.1% |
| 52-week high, Oct 5, 2026 | $487.47 | 100% |
Position in range is (close minus low) divided by (high minus low), using intraday low and high from the data vendor. The close is 71.6% above the low and 6.05% below the high. 5Y beta is 1.25 (StockAnalysis, benchmark and frequency not stated).
| Step | Amount |
|---|---|
| 3Q25 diluted EPS per ADR unit | $2.92 |
| 4Q25 diluted EPS per ADR unit | $3.14 |
| 1Q26 diluted EPS per ADR unit | $3.49 |
| 2Q26 diluted EPS per ADR unit | $4.31 |
| TTM EPS per ADR unit, sum | $13.86 |
| Close, October 8, 2026 | $457.99 |
| Implied IFRS-basis TTM P/E | approx. 33.0x |
| Less VIS gain per ADR unit, NT$2.24 x 5 / 31.60 | -$0.35 |
| TTM EPS per ADR unit excluding VIS gain | $13.51 |
| Implied P/E excluding VIS gain | approx. 33.9x |
Each quarter is converted to US dollars at its own average rate, so the sum approximates a single-rate figure. As a cross-check, the same four quarters sum to NT$86.27 of EPS per ordinary share (17.44, 19.50, 22.08 and 27.25). Converting at the 2Q26 average rate of NT$31.60 gives about US$13.65 per ADR unit (86.27 x 5 / 31.60), roughly 1.5% below the US$13.86 sum, and a multiple of about 33.6x. That shows how sensitive a US dollar multiple is to the exchange rate used.
Market capitalization is calculated and not taken from a vendor. TSMC reports 25,932 million total outstanding shares at June 30, 2026. Divided by five that gives 5.186 billion ADR equivalents, and multiplied by the $457.99 close that is about $2.375 trillion. StockAnalysis shows a lower US$2.07 trillion for TSM. That figure matches its Taipei listing page, NT$66.13 trillion retrieved October 9, 2026, converted at roughly NT$32 per US dollar, so it rests on the Taipei share price. The Taipei close on October 8 was NT$2,550 per share (StockAnalysis, third-party). At about NT$31.85 per US dollar (Yahoo Finance, third-party) that is roughly US$400 for the five shares behind one ADR, against the $457.99 ADR close, a premium of about 14% (calculated). The closes are not simultaneous. Taipei closes more than 14 hours before New York, and on October 8 the ADR fell 3.01% while the Taipei shares fell about 1.35% (Yahoo Finance), so part of the gap is timing and not only an ADR premium.
Sources
Company filings and TSMC publications carry all financial and concentration data in this note. Market data and media views are separately attributed and dated.
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Primary · used for 2Q26 results, per-ADR EPS and guidance
TSMC 2Q26 earnings release, July 16, 2026.
pr.tsmc.com/english/news/3326 -
Primary · used for income statement, share count and 3Q26 guidance
TSMC 2Q26 earnings release as filed on Form 6-K.
sec.gov, a2q26e_withguidancexfinal.htm -
Primary · used for full-year growth guide, outstanding shares and the free cash flow line
TSMC 2Q26 presentation as filed on Form 6-K.
sec.gov, a2q26presentatione.htm -
Primary · used for cash flow, capital expenditure, platform and node mix
TSMC 2Q26 Management Report, July 16, 2026.
investor.tsmc.com, 2Q26 ManagementReport.pdf -
Primary · used for the VIS EPS contribution, 12% and 37% guide comments, the capital budget and its April indication, the 3Q26 margin drivers, the AI demand comment, the conference time and A14, A13 and A12 timing
TSMC 2Q26 earnings call transcript, July 16, 2026.
investor.tsmc.com, TSMC 2Q26 Transcript.pdf -
Primary · used for the 6-K acceptance time
SEC EDGAR filing index for the 2Q26 Form 6-K.
sec.gov, 0001046179-26-000451-index.htm -
Primary · used for N2P and A16 timing
TSMC 4Q25 earnings call transcript, January 15, 2026, and TSMC 2nm technology page.
investor.tsmc.com, TSMC 4Q25 Transcript.pdf
tsmc.com, 2nm technology -
Primary · used for the receivables concentration, the VIS disposal (note 13) and the earthquake insurance claims (note 34)
TSMC consolidated financial statements for the six months ended June 30, 2026, reviewed, as filed on Form 6-K.
sec.gov, a2026q2consolidatedreport-.htm -
Primary · used for 1Q26 results, the April guidance and the prior growth guide
TSMC 1Q26 earnings release, Form 6-K and presentation.
pr.tsmc.com/english/news/3297
sec.gov, a1q26e_withguidancexfinal.htm
sec.gov, a1q26presentatione.htm -
Primary · used for 4Q25 and 3Q25 results and the January capital budget
TSMC 4Q25 and 3Q25 earnings releases as filed on Form 6-K.
sec.gov, a4q25e_withguidancexfinal.htm
sec.gov, a3q25e_withguidancexfinal.htm -
Primary · used for customer concentration and the ADR ratio
TSMC Form 20-F for the year ended December 31, 2025.
sec.gov, tsm-20251231.htm -
Primary · used for business model, history, listing dates, N2 start and the results calendar
TSMC company profile, investor FAQ, logic technology page and quarterly results calendar.
tsmc.com, company profile
investor.tsmc.com, FAQ
tsmc.com, logic technology
investor.tsmc.com, quarterly results calendar -
Market data · used for close, range, beta, one-day change and vendor market caps
StockAnalysis, TSM quote, price history and statistics, and TPE 2330 quote, retrieved October 9, 2026.
stockanalysis.com/stocks/tsm
stockanalysis.com/stocks/tsm/history
stockanalysis.com/stocks/tsm/statistics
stockanalysis.com/quote/tpe/2330 - Market data · used for the Taipei close and USD/TWD rate on October 8, 2026 StockAnalysis TPE 2330 quote and Yahoo Finance USD/TWD and 2330.TW history, third-party data, retrieved October 9, 2026. No Yahoo link is given because the pages show live data.
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Market data · used for the July 15 to 17, 2026 closes
Nasdaq, TSM historical quotes, retrieved October 9, 2026. The October 7 and 8 closes there match StockAnalysis.
nasdaq.com/market-activity/stocks/tsm/historical -
Market data · used for rating, analyst count and price target
StockAnalysis, TSM analyst forecast, data from S&P Global, retrieved October 9, 2026.
stockanalysis.com/stocks/tsm/forecast -
Market data · alternative price target, shown separately
MarketBeat, TSM forecast, retrieved October 9, 2026.
marketbeat.com/stocks/NYSE/TSM/forecast -
Secondary · used for media explanations only
Indmoney and Cryptobriefing, July 2026. Interpretation only.
indmoney.com, TSM analysis
cryptobriefing.com, TSMC results