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TSMC

Three fundamentals, Long-term growth

To be the trusted technology and capacity provider for the global logic IC industry for years to come
TSMC’s mission

Three fundamentals

TSMC made US$122.4 billion of revenue in 2025, up 35.9%, with a gross margin of 59.9%, making chips designed by 534 customers. Its mission is to be their trusted provider of technology and capacity, and it pursues it through what it calls the fundamentals of its business: technology leadership, manufacturing excellence, and customer trust. In July 2026 it said it expects revenue to grow by slightly more than 40% in 2026.

Technology Leadership

Mask 1 of 3
  1. 0102-nanometerRamp up 2-nanometer technology fast in 2026, after it entered high-volume manufacturing in the fourth quarter of 2025 with good yield.
  2. 020N2P, A16, and A14Start volume production of N2P and A16 in the second half of 2026, and of A14, another full step on from N2, in 2028.
  3. 030Advanced packagingDevelop advanced packaging and 3D chip stacking, including CoWoS, InFO, SoIC, and COUPE.

16 July 20262-nanometer made up 3% of wafer revenue in the second quarter of 2026, and 3-nanometer 30%.

16 July 2026Technologies of 7 nanometres and below made up 77% of wafer revenue in the quarter, up from 74% across 2025.,

16 April 2026TSMC spent US$7.9 billion on research and development in 2025, 6.5% of revenue.

High performance computing rose from 43% of TSMC’s revenue in 2023 to 58% in 2025

Over the same years, smartphones fell from 38% to 29%. TSMC reports its revenue by platform: the kind of device its customers’ chips go into.

58% High performance computing29% Smartphone5% Internet of things5% Automotive1% Digital consumer electronics2% Others

TSMC is building fabs in Arizona, Japan, and Germany while it adds more in Taiwan

TSMC says its customers value some geographic flexibility, and its new sites come with a necessary level of government support: in Arizona, up to US$6.6 billion of direct funding under the US CHIPS Act. In Taiwan it is preparing several phases of 2-nanometer fabs in Hsinchu and Kaohsiung.,

Arizona, United States

  • First fab, in production. In high-volume production since the fourth quarter of 2024.
  • Second fab, being built. High-volume manufacturing due in the second half of 2027.
  • Third fab, being built. Construction began in 2025.

Kumamoto, Japan

  • First fab, in production. Volume production of specialty technologies since December 2024.
  • Second fab, being built. Construction began in October 2025; planned for 3-nanometer.

With Sony, DENSO, and Toyota; TSMC owns about 72.6%.,

Dresden, Germany

  • First fab, being built. Specialty fab for car and industrial chips; construction began in 2024.

With Bosch, Infineon, and NXP, which hold 10% each.,

  1. Call the strategy what it is: the fundamentals.

    TSMC does not present its three themes as new initiatives but as the fundamentals of its business, the same each year, while the technologies and fabs under them change. We recommend that a company whose advantage comes from doing a few things better than anyone keeps those few things as its pillars for years, and changes the plans beneath them instead.

  2. Plan capacity with the customer’s customer.

    TSMC says it plans its capacity with its customers and with their customers, and builds for the overall trend rather than any single order. We recommend looking past the buyer to the market the buyer serves before committing to long, expensive investments, because the buyer’s own forecast can be wrong in the same direction as everyone else’s.

  3. Let customers decide where you build.

    TSMC is building in Arizona, Japan, and Germany because its customers value some geographic flexibility, and with a necessary level of government support, while it keeps investing in Taiwan. We recommend tying every new site to a reason customers give, so that expansion follows demand and not the other way round.

Sources

  1. 1. Taiwan Semiconductor Manufacturing Company Limited (2026). 2025 Annual Report: Letter to Shareholders. Annual report, 2026. investor.tsmc.com
  2. 2. Taiwan Semiconductor Manufacturing Company Limited (2026). Annual Report on Form 20-F for the fiscal year ended December 31, 2025. Annual report, 16 April 2026. sec.gov
  3. 3. Taiwan Semiconductor Manufacturing Company Limited (2026). TSMC Reports Second Quarter EPS of NT$27.25, and second quarter earnings conference. Results statement, 16 July 2026. sec.gov

Headwater is not connected with Taiwan Semiconductor Manufacturing Company Limited. TSMC, GIGAFAB, CoWoS, InFO, SoIC, and COUPE are trade marks of their owners. Updated 5 October 2026.

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