Taiwan Semiconductor Manufacturing Company Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Overall Performance: TSMC reported strong Q2 2026 results driven by leading-edge demand, particularly HPC/AI. Revenue reached $40.2B (high end of guidance). Advanced technologies (7nm and below) accounted for 77% of wafer revenue. Gross margin improved to 67.7% (+150 bps sequentially vs Q1 2026) due to cost improvements and higher utilization, partially offset by overseas fab dilution.

Revenue Breakdown

  • By Technology: 2nm: 3%; 3nm: 30%; 5nm: 33%; 7nm: 11%
  • By Platform (vs Q1 2026): HPC: 66% (+20% QoQ); Smartphone: 22% (-4%); IoT: 5% (+4%); Automotive: 4% (+15%); DCE: 1% (+5%)

Balance Sheet & Cash Flow (Q2 2026)

  • Cash & marketable securities: TWD 3.5T ($110B)
  • Cash from operations: TWD 783B
  • CapEx: TWD 496B ($15.7B USD)
  • Dividends paid: TWD 156B (for Q3 2025)
  • Inventory days: 87 (+7 days vs prior quarter, due to N2 ramp)
  • Accounts receivable days: 29 (+3 days)

Q3 2026 Guidance (vs Q2 2026)

  • Revenue: $44.6B–$45.8B (midpoint: +12% QoQ, +37% YoY)
  • Gross margin: 65–67% (midpoint 66%, -1.7pp sequentially)
  • Operating margin: 56–58%

Gross margin decline primarily due to steep 2nm ramp (dilution of ~3–4pp), partially offset by strong demand and cost improvements.

Full-Year 2026 Outlook (Updated vs Prior Guidance)

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Jeff Su: Good afternoon, everyone, and welcome to TSMC's second quarter 2026 earnings conference and conference call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today. Today's event is being webcast live through TSMC's website at www.tsmc.com, where you can also download the earnings release materials. If you're joining us through the conference call, your dial-in lines are in listen-only mode. The format for today's event will be as follows. First, TSMC's Senior Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the second quarter 2026, followed by our guidance for the third quarter 2026. Afterwards, Mr. Huang and TSMC's Chairman and CEO, Dr. C.C. Wei, will jointly provide the company's key messages. We will open both the floor and the line for the question and answer session. As usual, I'd like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears in our press release. Now, I would like to turn the microphone over to TSMC CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance. Wendell Huang: Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with financial highlights for the second quarter of

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