Taiwan Semiconductor Manufacturing Company (TSMC) is set to release its March revenue figures on Friday, offering a critical early snapshot of its first-quarter performance. The data will indicate whether the chipmaker is on track to meet its ambitious quarterly sales forecast of $34.6 billion to $35.8 billion, the midpoint of which implies a 38% year-on-year surge. This follows a strong start to the year, with January sales up 37% and February up 22%.
Analysts are watching closely, with GF Securities recently raising its price target for TSMC’s Taiwan-listed shares from NT$2,325 to NT$2,808. The primary driver remains unrelenting demand for AI accelerators, which is pushing the company’s physical manufacturing capacity to its limits. As industry peer Broadcom has noted, the transition by cloud providers from pilot projects to large-scale AI deployments is creating genuine supply constraints.
To meet this soaring demand, particularly for advanced 3-nanometer and upcoming 2-nanometer chips, TSMC has significantly increased its capital expenditure budget. For 2026, spending is projected between $52 billion and $56 billion, a roughly 30% increase from the $40.9 billion spent in the previous year. Institutional investors suggest the company may push expenditures toward the upper end of that range. Capacity for the 2-nanometer node, seen internally as the future primary revenue driver, is planned to double by 2027.
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While operational growth is robust, geopolitical risks are emerging as a significant concern for cost management. The ongoing conflict affecting the Strait of Hormuz, a chokepoint for about 20% of global oil and liquefied natural gas transport, threatens energy flows. This is a direct risk for Taiwan, which imports nearly 95% of its energy needs and relies on natural gas for roughly 48% of its power generation. For TSMC’s energy-intensive fabs, securing fuel supplies is critical. A key challenge will be passing on higher costs to customers to maintain its long-term gross margin target above 53%.
On the trade front, tensions with Washington have eased somewhat. Under the current U.S.-Taiwan framework agreement, the tariff rate on Taiwanese goods has been reduced to 15%. Furthermore, Taiwanese semiconductor producers investing in U.S. capacity can import duty-free up to 2.5 times their planned output volume. The U.S. Commerce Department is also planning additional exemptions for hyperscalers like Amazon, Google, and Microsoft, contingent on investment commitments from TSMC, which could accelerate the timeline for its U.S. fab completions.
The stock, trading around $362.11 on U.S. exchanges, has gained nearly 150% over the past year. The full quarterly results, scheduled for release on April 16, will provide a deeper look at margin performance and the detailed investment roadmap. Tomorrow’s March revenue figure is the first concrete data point to assess if TSMC’s projected full-year growth of nearly 30% for 2026 remains achievable amidst both unprecedented demand and mounting external pressures.
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