Taiwan Semiconductor Manufacturing Company Limited Q3 2026 Earnings Recap

TSMC shares fell 2.8% after earnings. The near-term outlook remains for revenue growth, but investors may be weighing continued gross-margin dilution from the 2 nm ramp and overseas fabs, alongside management’s cautious planning for 2027 amid challenged consumer and price-sensitive markets.

Key Takeaways

• Q3 revenue rose 16.2% sequentially to $46.7 billion, above the high end of guidance; EPS was TWD 29.43.
• Gross margin fell 1.3 percentage points sequentially to 66.4%. Q4 guidance implies a further 0.4-point decline to 66% at the midpoint, due mainly to 2 nm ramp-up and overseas fab dilution.
• Q4 revenue is forecast at $52.3 billion–$54.3 billion, up 14% sequentially at the midpoint; full-year 2026 revenue growth is now expected to be around 44% year over year.
• 2 nm contributed 8% of wafer revenue in Q3, while advanced technologies (7 nm and below) accounted for 79%.
• Management expects overseas fab margin dilution to widen to 3%–4% over the next few years as more U.S. fabs ramp, and reiterated 2026 CapEx guidance of $60 billion–$64 billion.