TSMC Beats Q4 Revenue Estimates, Launches 2-nm Production as GS Raises Target
TSMC reported Q4 revenue of NT$1,046.08 billion (US$33.05 billion), beating forecasts and maintaining a 72% share of the global foundry market. Goldman Sachs raised its price target by 35% after TSMC commenced volume production of 2-nm chips at Fab 22, with all 2-nm capacity sold out and CoWoS wafer shipments seen exceeding 1.2 million in 2026.
1. Strong Q4 Performance and AI-Driven Demand
Taiwan Semiconductor reported fourth-quarter revenue of NT$1,046.08 billion, representing a 20% year-over-year increase driven largely by accelerating demand for AI-related chips. Data center and high-performance computing applications accounted for more than half of wafer revenues, offsetting seasonal softness in mobile handset demand, which made up approximately 30% of the quarter’s sales. This robust top-line growth underscores TSMC’s critical role in supplying chips for leading AI platforms and hyperscale data centers.
2. Dominant Foundry Position and Advanced Nodes
TSMC maintained an estimated 72% share of the global foundry market in Q3 2025, reinforcing its leadership in advanced manufacturing technologies. The company commenced volume production of 2-nanometer chips at its Kaohsiung facility and plans to introduce an enhanced N2P process in the second half of 2026. These cutting-edge nodes deliver higher performance and power efficiency, enabling customers to pack more transistors into smaller footprints and stay ahead in AI workloads.
3. Capacity Expansion and Margin Upside
Management projects that 2 nm capacity will double by the end of 2026, with existing N2 capacity already fully subscribed and commanding a 10%–20% pricing premium over 3 nm wafers. CoWoS (Chip-on-Wafer-on-Substrate) packaging volumes are also set to rise from an estimated 1.2 million wafers in 2026 to 2.2 million in 2027, reflecting growing integration of high-bandwidth memory in AI accelerators. These initiatives are expected to drive further margin expansion as advanced nodes and packaging contribute an increasing share of total wafer shipments.
4. Guiding Growth and Valuation Discount
Consensus forecasts anticipate TSMC’s earnings to grow by about 25% in 2026, following an estimated 48% jump in 2025. Analysts note that the company trades at roughly 26 times forward earnings versus a 33-times average for leading technology peers, suggesting a valuation discount given its market leadership and multi-year growth runway. With a backlog of capacity commitments extending into 2027 and accelerating AI infrastructure spending, TSMC appears positioned for sustained shareholder value creation.