TSMC

What TSMC does

Taiwan Semiconductor Manufacturing Company (TSMC) is a foundry: it manufactures chips from designs supplied by its customers. Its company profile says it was established in 1987 by Morris Chang, pioneered that business model, and in 2025 made 12,682 products for 534 customers. Those customers include AMD and Nvidia. AMD said in May 2026 that its next server processor was ramping on TSMC's 2-nanometer process. Nvidia's annual report names TSMC as a wafer supplier.

Chip manufacturing processes are labeled in nanometers. Smaller numbers mean newer generations. TSMC's 2-nanometer process entered volume production in 2025, according to its annual report on Form 20-F, which counts 90,557 full-time employees at the end of that year.

Why it matters

In the second quarter of 2026, high performance computing, the category that includes AI accelerators, supplied 66% of revenue, its management report shows. It shows customers based in North America accounted for 78%. The customer base is concentrated. The ten largest customers provided 78% of 2025 revenue and the largest 19%, the 20-F says. Taiwan's National Development Fund, a government fund, held 6.38% of shares as of February 28, 2026.

Most of TSMC's fabs are in Taiwan. The company is a focus of trade policy. The filing says a US-Taiwan agreement announced in January 2026 would cap US reciprocal tariffs on Taiwanese goods at 15%. It says the agreement would give preferential tariff treatment to Taiwanese chipmakers that invest in US capacity. US Commerce Secretary Howard Lutnick said the aim was to move 40% of Taiwan's chip capacity to the United States, The Register reported. Taiwan's Vice Premier Cheng Li-chiun called that impossible, it reported.

Recent developments

TSMC's 2025 revenue was NT$3,809.05 billion, or US$122.42 billion, up 35.9% in US dollar terms, according to its fourth-quarter report. On July 16, 2026, it reported second-quarter revenue of US$40.20 billion and net income of NT$706.56 billion, up 77.4% from a year earlier.

On the earnings call that day, management raised the 2026 capital budget to US$60-64 billion. It forecast full-year revenue growth slightly above 40% in US dollar terms and announced a further US$100 billion investment in Arizona. That lifts the planned US total to US$265 billion, after a March 2025 pledge had taken it to US$165 billion. The Register noted that chief executive C.C. Wei gave no firm schedule. It recalled that Intel's own multi-site fab plans were later canceled or delayed.

In August 2026 TSMC and Sony Semiconductor Solutions agreed to form a joint venture in Kumamoto, Japan, to make image sensors. Sony would be the controlling shareholder, with volume production expected in 2029.

Taiwanese prosecutors indicted three people in August 2025 over the alleged theft of 2-nanometer trade secrets, The Register reported. In November 2025 TSMC sued a former senior vice president who had joined Intel. Intel called the claims meritless.

What to watch

On the July 2026 call, management said it expected the 2-nanometer ramp to cut gross margin by 3 to 4 percentage points in the second half of 2026. It expected overseas fabs to dilute gross margin by 2 to 3 points in their early years. Its A14 process, which Wei described as the next full-node step after 2-nanometer, is scheduled for volume production in 2028. Wei said the pace of the Arizona build-out depends on market conditions. The 20-F, dated April 2026, says details of the preferential tariff treatment remained unclear after a February 2026 Supreme Court ruling struck down the reciprocal tariffs. It also notes that TSMC's Nanjing fab in China operates under an annual US export license that must be renewed.