TSMC Revenue Rises 53% as AI Chip Demand Outstrips Supply

(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. ( TSM ) reported a 53.3% increase in monthly sales, with the company struggling to meet overwhelming demand from the global AI infrastructure buildout.

Revenue in August reached NT$514.8 billion ($16.3 billion). Analysts on average are expecting 46.8% sales growth for the current quarter.

The go-to chipmaker for Nvidia Corp. and Apple Inc. said recently that it can't catch up with demand even as it's building new factories at an unprecedented pace. The Taiwanese chipmaker is trying to construct and furnish about 20 factories at home and overseas, while its typical record in the past would see it working on four or five new buildings simultaneously, TSMC Deputy Co-Chief Operating Officer Cliff Hou said this month.

"Right now you're almost 4x or 5x, trying to catch up, but still you cannot meet demand," Hou said, adding the company's needs for chipmaking tools nearly doubled since the end of last year.

TSMC also needs to spend more on upgraded gear. It recently struck an agreement with ASML Holding NV to start using the Dutch company's state-of-the-art High NA extreme ultraviolet lithography machines in mass production starting from 2030. Before the deal, the Taiwanese company had repeatedly said it wouldn't deploy ASML's most advanced systems — which can cost $400 million a piece — just yet due to cost concerns.

Consensus might underestimate TSMC's potential for 2027 margin resilience. Expectations for 31% earnings growth on 35% revenue growth in 2027 imply gross margin of 65.5% vs. 66.4% in 2026. The compression reflects known drags: TSMC guides 2-nanometer and overseas-fab dilution of 3-4 percentage points each, while depreciation rises behind a more than $60 billion capital-spending budget. Yet pricing should be able to offset part of those drags as some planned 2H26 increases were deferred into 1Q27.

In July, TSMC raised its spending and revenue projections for the year, reflecting confidence that torrid growth in demand for AI chips would extend into 2027 and beyond. TSMC expects its capital expenditure to reach a record level of $60 billion to $64 billion in 2026 and forecasts its full-year sales to grow slightly above 40% in US dollar terms. The chipmaker's shares have gained about 60% since the beginning of the year.