TSMC reports the lowest revenue growth in more than a year 📊

TSMC (Taiwan Semiconductor Manufacturing, TSM.US) — the main producer of AI chips and Nvidia’s largest manufacturing partner — reported its slowest monthly revenue growth in over a year. October sales rose 16.9% year-over-year, in line with analysts’ expectations.

• The strength of the local currency likely weighed on reported figures in Taiwanese dollars, although in U.S. dollar terms, sales rose 22.6% to $12 billion, up from $9.8 billion a year earlier. The result does not indicate weaker demand for AI chips; rather, the data were distorted by earlier orders and a weaker dollar. TSMC shares traded mostly flat in Tuesday’s Asian session, while industry players maintain a positive outlook for AI-driven growth.
• TSMC continues to face record-high demand for its latest N3 chips, as AI giants Nvidia, Apple, Amazon, Meta, and Microsoft compete for limited production capacity. According to a recent JPMorgan report, Nvidia requested production be raised to 160,000 wafers per month, but TSMC is unlikely to exceed 140,000–145,000 wafers by the end of 2026.
• This implies that chip shortages could persist for at least two more years. The strong AI-related demand has pushed TSMC’s fabs to full capacity, boosting its gross margins, which the market estimates could reach 60–65% in the first half of 2026.

TSMC’s largest clients have reserved production slots well in advance, meaning smaller firms — such as crypto miners — may have limited access to chips. Instead of building a new N3 plant, TSMC is upgrading existing facilities:

• Fab 18 in Tainan will expand output by 25,000 wafers per month,

• Fab 20 (Hsinchu) and Fab 22 (Kaohsiung) are being prepared for N2 and A16 technologies.
  The company also plans to utilize older N6 and N7 lines, potentially adding 5,000–10,000 wafers per month by late 2026.
  In the U.S., Fab 21 in Arizona will enter its second phase in mid-2026, but full production (10,000 wafers/month) is expected only in 2027 — too late to ease the current supply shortage.

According to market sources, some clients are paying up to twice the standard rate (so-called hot-run premiums) to secure priority access. Roughly 10% of total production now operates under this scheme, further boosting TSMC’s profits. Analysts estimate that planned price increases of 6–10% in 2026 will allow the company to maintain gross margins above 60%, with results likely exceeding market expectations. The company reports revenue on a monthly basis.

TSMC shares (D1 interval)

The stock recently dipped below the 50-day EMA but quickly recovered. For bulls, regaining the $300 level per share would strengthen the case for a move toward record highs. Although October revenue came in slightly below the recent growth trend, this was likely driven by seasonal and one-off factors rather than operational weakness. The company’s fabs are running at full capacity, and high-margin semiconductors continue to make up an increasing share of total sales.

Source: xStation5