Taiwan Semiconductor Manufacturing (TSM) - Stock report

Taiwan Semiconductor Manufacturing is a pure-play foundry, which means it manufactures chips that other companies design rather than selling branded chips of its own. Customers pay it to turn their designs into finished wafers and advanced packaging at very large scale. TSMC earns money by keeping its expensive factories full, holding high production yields and pricing, and converting that output into cash. Many leading chip companies depend on it to build the advanced processors that run computing infrastructure. In fiscal year 2025 it ran 305 process technologies, made 12,682 products, and served 534 customers, all inside a single foundry business.

TSMC has raised its fiscal year 2026 capital spending to between US $60 billion and US $64 billion, its largest investment wave yet. That spending only pays off if factories stay full and prices hold, because higher depreciation and startup costs land on the accounts whether or not the new capacity earns well.

Management expects its 2-nanometer generation, its newest chip-making technology, to reduce second-half gross margin by about 3 to 4 percentage points, and new factories outside Taiwan already lowered margin in the latest quarter. The business can keep growing while the returns on this expansion quietly weaken.