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Earnings deep dive · Tier A Semi

TSMC Q2 2026 — The Node Everyone Needs Just Sold Out

Record revenue, record margins, capex raised again — and an N2 node already outrunning supply before it ramps. The question for the AI silicon stack isn't whether demand is real. It's who gets the wafers.
Published · Post-print analysis · TSMC · For analysts covering leading-edge foundry, AI accelerators, and semi-cap equipment

The setup

TSMC walked into the print with the top line essentially pre-announced — the company reports monthly sales, and June closed a quarter no one doubted. The bar was never revenue; it was margin durability and forward commitment. Could gross margin hold above 65% while the company absorbs N2 start-up costs, how hard would capex get pushed, and would management concede that leading-edge demand is running ahead of a supply base it has spent two years expanding? On all three the answer came in hot.

The answer, in a sentence: demand is outrunning supply, margins made a new high anyway, and management put more capacity money behind the view.

TSMC 2Q26 Income Statement 2Q26 · quarter ended · consolidated · NT$ in billions Revenue NT$1,270.4B +36.0% Y/Y NT$1,270.4B +36.0% Y/Y Net revenue US$40.2B at NT$31.601 · advanced nodes (7nm and below) 77% of wafer revenue Gross profit NT$860.3B 67.7% margin +910bps Y/Y Cost of revenue (NT$410.1B) 32.3% of revenue Operating profit NT$766.6B 60.3% margin +65.4% Y/Y Operating expenses (NT$93.7B) Net profit NT$706.6B 55.6% margin +77.4% Y/Y Tax, net of non-operating income (NT$59.8B) NT$155.6B tax less NT$95.8B non-operating income Noncontrolling interests (NT$0.2B) R&D (NT$73.1B) 5.8% of revenue SG&A, net of other operating income (NT$20.6B) NT$25.8B SG&A less NT$5.3B other operating income Source: TSMC 2Q26 consolidated financial statements · chart: tkal.news
Where TSMC's 2Q26 revenue dollar went: 67.7% survives cost of revenue, 60.3% survives operating expense, 55.6% lands as net income attributable to the parent. Other operating income of NT$5,274M is netted against SG&A so operating expense reconciles to income from operations. Tax, net = NT$155,649M income tax − NT$95,827M non-operating income (NT$67,430M other gains, NT$26,959M net interest income, NT$1,438M associates): NT$766,603M − NT$59,822M − NT$219M noncontrolling interests = NT$706,562M attributable to the parent. Three months ended .

The numbers

Consolidated revenue was NT$1,270.38B (US$40.2B), up 33.7% year-over-year in dollar terms and 12.0% sequentially — a record. Net income was NT$706.56B with diluted EPS of NT$27.25 (US$4.31 per ADR), both up 77.4% year-over-year and 23.4% quarter-over-quarter. The margin stack is the story: gross margin 67.7%, operating margin 60.3%, both all-time highs, with net margin at 55.6%. High-performance computing was 66% of revenue and the advanced-technology mix (7nm and below) reached roughly 77%. N2 contributed for the first time at about 3% of wafer revenue, up from zero in Q1. Alongside the print, TSMC announced an additional US$100B Arizona investment.

The guide extends the setup rather than softening it. Q3 2026 is set at US$44.6–45.8B in revenue, with gross margin of 65–67% and operating margin of 56–58% — the midpoint GM of ~66% is about 1.7 points below Q2, and management tied the step-down primarily to N2 ramp costs. Full-year 2026 revenue growth was framed at "slightly above 40%" in US-dollar terms, and 2026 capex was raised to US$60–64B. Management also guided that N2 start-up costs will dilute gross margin by roughly 3–4 points in the second half.

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The headline numbers are above. The 6 sections below carry the mechanism, the peer read, the valuation work, and the dated tests that decide it.

  • What's actually driving it
  • How peers read this
  • Valuation reality check
  • What we'd watch from here
  • Listed-market read-through
  • Bottom line
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