TSMC raises 2026 outlook as AI chip orders continue to outrun capacity

Taiwan Semiconductor Manufacturing Co. has posted a 69% rise in quarterly profit and lifted its growth forecasts, as demand for AI processors and advanced packaging continues to exceed supply.

Taiwan Semiconductor Manufacturing Co. has reported another record quarter, underlining how tightly the artificial-intelligence build-out is still bound to the company’s advanced manufacturing capacity. On 15 October, the chipmaker said third-quarter net profit rose to T$763.1 billion, a 69% increase from a year earlier, while revenue reached $46.7 billion and came in above the top end of the range it had set in July. Chief executive C.C. Wei said demand remains well ahead of what TSMC can currently supply, reinforcing the view that the industry’s bottleneck is no longer just chip design, but also the capacity to make and package the most advanced components.

The company responded by lifting its full-year revenue outlook and signalling that the momentum is likely to continue into 2026. It now expects revenue to rise by about 44% in US dollar terms next year, up from a previous forecast of more than 40%. For the fourth quarter, TSMC guided for sales of between $52.3 billion and $54.3 billion, which would imply growth of as much as 61% from the same period a year earlier. Even so, management struck a more cautious tone on 2027, pointing to broader economic uncertainty that could eventually affect customer spending.

The strength of the quarter reflects persistent demand from major buyers of AI processors, particularly Nvidia, while interest in TSMC’s CoWoS advanced packaging capacity also remains intense. The company said it intends to keep capital expenditure in 2026 at between $60 billion and $64 billion, after previously committing $265 billion to factories in Arizona. It also said the second Arizona plant has finished construction and is now expected to begin mass production in the third quarter of 2027, ahead of schedule. Beyond the United States, TSMC is weighing further expansion, including work in Texas and discussions around Elon Musk’s proposed Terafab project, although Musk has said his companies would build and run the facility themselves.

Longer term, Wei pointed to rising demand from agentic AI systems and networking chips as additional drivers of semiconductor consumption. TSMC expects its AI accelerator revenue to grow at a compound annual rate in the mid- to high-50s between 2024 and 2029, with executives suggesting actual growth could exceed that range. The company’s market value now stands close to $2 trillion, placing it among the most valuable listed businesses in the world and highlighting how central it has become to the global AI supply chain. Yet, despite that position, its outlook remains measured: the order book is still outpacing output, but the pace of expansion will ultimately depend on whether customers keep investing at the current rate.