TSM.US revenue surged 53.3% in August, demand for AI chips “exploded”

The Zhitong Finance App learned that TSM.US announced a 53.3% year-on-year increase in monthly sales in August. The company is struggling to cope with the huge demand brought about by global AI infrastructure construction, and the supply side continues to be tight. In August, revenue reached NT$514.8 billion (approximately US$16.3 billion). Analysts on average expect TSMC's sales to increase by 46.8% this quarter.

The core chip foundry of Nvidia and Apple recently said that even if it is building new factories at an unprecedented speed, it is still unable to keep up with the pace of demand. TSMC's Deputy Chief Operating Officer Cliff Hou said this month that the company is trying to build and equip about 20 factories in Taiwan and overseas, but in the past, only four to five new construction projects were usually promoted simultaneously.

“The current pace is almost four to five times that of the past. We are trying to catch up, but we are still unable to meet demand,” Cliff Hou said, adding that the company's demand for chip-making equipment has almost doubled since the end of last year.

TSMC still needs to invest more money in upgrading the equipment. The company recently reached an agreement with Asmack to use the Dutch company's advanced high-numerical aperture extreme ultraviolet lithography machine in mass production starting in 2030. Prior to that, TSMC had stated many times that it would not deploy Asmack's most advanced systems due to cost considerations — each unit could cost as much as 400 million US dollars.

Analyst Charles Shum said that market consensus may have underestimated TSMC's potential for profit margin resilience in 2027. The market expects revenue growth of 35% and profit growth of 31% in 2027, and implied gross margin of 65.5%, compared to 66.4% in 2026. This compression reflects a known drag: TSMC guides the 2 nm process and overseas factories to dilute gross margins by 3 to 4 percentage points, respectively, while depreciation rose, behind a capital expenditure budget of more than 60 billion US dollars. However, pricing should partially offset these delays, as some of the price increases originally planned for the second half of 2026 have been postponed to the first quarter of 2027.

In July, TSMC raised its annual spending and revenue forecasts, reflecting confidence that the strong growth in demand for AI chips will continue until 2027 and beyond. TSMC expects capital expenditure to reach a record $60 billion to $64 billion in 2026, and predicts sales growth of slightly more than 40% in US dollars for the full year. The company's stock price has risen about 60% since the beginning of the year.