UMC raises 2026 capex to US$2 billion, expands Singapore and Taiwan fabs for AI demand

Taiwan Semiconductor Manufacturing reported record Q3 2026 revenue of about NT$1.49t, with September alone at NT$511.86b, driven by demand for chips used in AI workloads. Management highlighted advanced packaging services for AI accelerators as a key contributor to the quarter, and said leading edge capacity is fully booked through 2026. TSMC also agreed a multi year, US$2b silicon interposer supply arrangement with GlobalFoundries that includes the first U.S.-based silicon interposer production for its packaging, extending its CoWoS packaging supply chain into the United States and spreading manufacturing risk. The company is supporting a US$64b capex plan, and investors will watch whether it can ease advanced packaging constraints and how much of that spend translates into stable utilization and revenue progress through and after the Malta ramp toward 2028.

Taiwan Semiconductor Manufacturing reported second-quarter 2026 revenue of NT$1,270.38 billion, up 36.0%, with net income and diluted earnings per share both climbing 77.4%. Advanced technologies of 7-nanometer and smaller accounted for 77% of wafer revenue, with the 3-nanometer node at 30% and 5-nanometer at 33%, while gross margin reached 67.7%, operating margin 60.3%, and net profit 55.6% of revenue. September revenue came in at about NT$511.86 billion, up 54.6% year over year, following August's 53.3% gain, and first-nine-month 2026 revenue rose 41.1%. Management guided third-quarter revenue to between US$44.6 billion and US$45.8 billion, versus US$40.20 billion in the second quarter, but projected gross margin of 65% to 67% and operating margin of 56% to 58%, both below second-quarter levels, as the 2-nanometer process ramps up after contributing 3% of wafer revenue in the second quarter. At a forward P/E of 28.44 as of October 6, above its 5-year average of 21.78 and the sector's 23.74, TSMC trades at a premium, with EPS expected to rise 30.04% in 2027.

Wedbush Securities said Taiwan Semiconductor's stronger-than-expected third-quarter sales are a good sign for the chipmaker's fourth quarter. Taiwan Semiconductor, the world's largest contract chipmaker, reported record third-quarter revenue of NT$1.49T, or $46.71B, up 50% year-over-year, exceeding the LSEG SmartEstimate of NT$1.46T and the company's own guidance of $44.6B to $45.8B. Wedbush analyst Matt Bryson wrote in a note to clients that the result represents a slightly larger than typical beat, noting that upside last quarter totaled about 1%, and that with revenue ahead of the range and the exchange rate essentially in line with the 32.0 TWD/USD embedded in the outlook, gross margins will likely at least meet the 66% midpoint of TSMC's 65% to 67% guidance and more likely exceed his 66.0% estimate. Bryson, who has an Outperform rating on Taiwan Semiconductor and a NT$3,000 price target, added that given TSMC's near monopoly position in cutting edge fabrication, with all major AI paths currently reliant on TSMC, he continues to see the stock as one of the best and safest ways to invest in a future dominated by AI. Taiwan Semiconductor is scheduled to release its full third-quarter financial results and provide updated guidance on Oct. 15.

Tesla and SpaceX have committed an initial $16.8 billion to Terafab, Elon Musk's plan to build one of the world's largest chip-making complexes in Grimes County, Texas, covering more than 100 million square feet and expected to start manufacturing chips by 2029. Intel Corp. joined the project in April, committing to design, make and package chips, and Musk has said the plant will use Intel's next-generation 14A process, a significant boost for an Intel foundry business that lost more than $10 billion at the operating level in 2025. Musk shut down speculation that Taiwan Semiconductor would help run the Texas plants, writing on X that Tesla and SpaceX will build and run the fab themselves, with TSMC at most given leased space inside the complex. The vertically integrated facility is designed to handle chip manufacturing, packaging and testing under one roof, with chips mostly built for edge computing and inference to power Tesla's Optimus robots and Cybercabs along with high-performance processors for SpaceX's planned space-based data centers. Investors positioned for the buildout could look to chip equipment makers such as ASML Holding, Applied Materials, Lam Research and KLA Corp, packaging and testing players including Amkor Technology, ASE Technology and Teradyne, materials and utilities suppliers such as Linde and Entegris, power and electrical infrastructure names including Eaton, Vertiv, Quanta Services and GE Vernova, or semiconductor ETFs such as the VanEck Semiconductor ETF and iShares Semiconductor ETF.