By Sophie Lindqvist

AI-related chips generated an estimated $13.31 billion for Taiwan Semiconductor Manufacturing Co. in the second quarter of 2026, according to an analyst model of the foundry's segment disclosures. The figure represents roughly one-third of the foundry's $40.2 billion quarterly revenue. The estimate implies a 68.3 percent year-on-year rise for AI silicon, though TSMC itself does not confirm a specific dollar total.

What does TSMC say about AI growth?

Chief Executive Officer and Chairman C.C. Wei declined to update the company's January forecast. That forecast projected AI-related revenue to compound at a mid-to-high 50 percent annual rate through 2030. Wei told analysts the underlying number is "stronger and stronger and stronger." TSMC has not disclosed a specific AI revenue figure since 2024. That silence leaves room for both upside surprise and analyst overstatement.

How did the HPC segment perform?

High-performance computing drove $26.53 billion of Q2 2026 sales, up 47.1 percent year-on-year. AI chips accounted for roughly half of HPC revenue under the model. Non-AI HPC revenue neared $13.23 billion, up 30.5 percent year-on-year. Datacenter accelerator and CPU demand now outweighs handset silicon across all of TSMC's disclosures, reversing the smartphone-driven order that defined the foundry for a decade.

Smartphone revenue reached $8.84 billion, up 8.9 percent year-on-year despite a 5.2 percent sequential decline. IoT, automotive, data center electronics, and other segments combined for $4.82 billion, up 23.4 percent year-on-year.

Why is capex climbing so quickly?

TSMC spent $29.8 billion on capital expenditure in 2024. The company lifted that figure 37.4 percent to $40.9 billion in 2025. The 2026 capex range now sits between $60 billion and $64 billion, up from the $52 billion to $56 billion range set earlier this year. At the high end, that marks a 56.5 percent year-on-year increase. TSMC held $110.22 billion in cash and short-term investments at quarter-end.

Roughly 70 percent of capex funds front-end wafer fabrication. Ten to twenty percent funds advanced packaging facilities. The remainder supports specialty products, Wei said. Less than half of the 2026 capex increase reflects real expansion beyond the original plan, by the author's estimate. The remainder stems from equipment and facility price inflation as global semiconductor tool demand outstrips supply.

What is happening in Arizona?

TSMC committed an additional $100 billion to its Arizona manufacturing footprint during the analyst call. The added investment lifts total US commitments to $265 billion across several unspecified years. Four new fabs will produce 2-nanometer and smaller geometries. Arizona's first site ramps a 3-nanometer process today, mirroring new 3-nanometer capacity in Taiwan and Japan.

Some 5-nanometer lines convert to 3-nanometer output to expand the 3-nanometer node. Wei reminded analysts that fab construction requires five to seven years. Annual capex therefore trails cumulative capacity commitments. Investors should not expect every committed dollar to translate into shipped wafers within the announcement year.

How is the 2-nanometer ramp progressing?

The June quarter marked TSMC's first material 2-nanometer revenue. The node contributed $1.21 billion to the period. AMD's "Venice" Epyc 9006 server CPUs and forthcoming MI450 GPUs anchor early demand. AMD's Advancing AI 2026 event may feature the MI450 and additional 2-nanometer silicon.

2-nanometer wafers carry higher per-unit prices than 3-nanometer equivalents. Yield ramps at new nodes carry execution risk. AMD pushes volume into the early ramp as Nvidia once did at 4-nanometer, a parallel that omits differences in fab readiness and customer mix. Other vendors will adopt the node as capacity permits, though their timelines remain unconfirmed.

What did Wei say about customer forecasts?

Wei addressed the gap between customer demand signals and TSMC's internal forecasts during the call. "Now remember that I believe every customer tells me the truth – every one. You put all the truths together, it's not the truth," Wei said. He described the aggregation process as a "very careful judgment" that "may not be correct." That hedge is the operative phrase for any reader who treats TSMC's revenue guidance as a floor rather than a midpoint.

How much pricing power does TSMC have?

Second-quarter revenue reached $40.2 billion, up 33.7 percent year-on-year and 12 percent sequentially. Net income climbed 74.7 percent year-on-year to $22.37 billion. Net margin reached 55.6 percent of revenue. Wafer shipments totaled 4.34 million 12-inch equivalents, up 16.6 percent year-on-year. Revenue per wafer hit $9,271, up 14.6 percent year-on-year and 7.8 percent sequentially. Four years ago, revenue per wafer was half that level. Seven years ago, it was one-third. Advanced process mix and tight capacity drive the rise, with both factors continuing to favor TSMC in the near term, though that advantage will erode as peers catch up over the coming years.

What competitive threats are emerging?

Intel Foundry and Samsung Foundry both stand to gain from sustained TSMC tightness. Samsung benefits from robust DRAM and HBM memory revenue to fund logic expansion. Wei welcomed Intel's EMIB-T interposer traction because the technology eased pressure on TSMC's strained CoWoS advanced packaging line. China-based Semiconductor Manufacturing International Corp holds roughly 6 percent of foundry revenue and grows as US export controls exclude Chinese buyers from advanced TSMC nodes. Real competition takes four to five years to materialize, the source cautions. Patience remains the operative discipline.

What comes next?

TSMC's pricing discipline and supply tightness argue for continued margin expansion through 2027. Capex absorption follows capacity absorption, which follows demand absorption. The cadence stretches across years, not quarters. AI revenue will likely exceed the mid-to-high 50 percent CAGR baseline that TSMC set in January, though the company will not quantify it. Sustained tightness, however, invites challengers from Korea, the United States, and China.