22OCT

TSMC holds $60-64bn capex, lifts outlook

2 min read

16:14UTC

TSMC kept 2026 capital spending at $60-64bn and lifted its full-year revenue growth forecast to about 44%.

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Key takeaway

TSMC raised its 2026 growth forecast to about 44% without lifting capital spending.

TSMC (Taiwan Semiconductor Manufacturing Company), the main maker of advanced AI chips, held this year's capital spending plan at $60-64bn when it reported third-quarter results on 15 October, and raised its full-year revenue growth forecast to about 44%⁠¹. High-performance computing, chiefly AI data-centre chips, made up 68% of third-quarter revenue⁠². Taiwan's Executive Yuan confirmed in September that it would keep funding the island's AI infrastructure programme.

Deep Analysis

In plain English

TSMC, the Taiwan Semiconductor Manufacturing Company, makes the most advanced computer chips in the world for other companies, including the chips that run AI systems in large data centres. It reported that sales grew strongly in the three months to September and that it expects revenue to rise about 44% this year. It will keep spending $60-64bn this year on new factories and equipment. Most of its revenue now comes from chips for powerful computers used in AI.

Deep Analysis

Root Causes

TSMC makes most of the world's leading-edge AI processors, and the advanced packaging needed to combine processors with high-bandwidth memory has been a bottleneck since 2023. Customers have few alternatives, which gives TSMC pricing power and visibility several years ahead.

Governments are paying for supply outside Taiwan for security reasons. Fabs in Arizona, Japan and Dresden, where TSMC's joint venture ESMC targets mass production in late 2027, cost more to run, and TSMC expects them to dilute its gross margin by about 2 points.

What could happen next?

Consequence
TSMC's capital spending in 2027 and 2028 is likely to rise above the 2026 range, given its statement that the next three years will significantly exceed 2023-25.
Risk
If the few large buyers of AI chips cut spending together, foundry capacity built for them could face a sharp utilisation drop, as in 2001.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: Chipmakers raised capital spending sharply through 2000 on internet and telecoms demand, then suffered the worst downturn in the industry's history in 2001 when that demand collapsed. Concentrated buyers and long fab lead times turned a spending pause into overcapacity.

Counter-parallel: The smartphone build-out after 2010 drove a decade of sustained foundry investment at TSMC without a comparable bust, because end demand from billions of consumers kept growing. The difference lay in the breadth of the paying customer base.

The immediate figures show third-quarter revenue of about $46.7bn and net income of NT$763.06bn, up 68.7% on the year, with fourth-quarter guidance of $52.3-54.3bn.

Structurally, chip fabrication needs heavy capital and relatively few workers per dollar of revenue. A rising share of global technology investment going to fabs and data centres directs money into assets rather than payrolls, which links TSMC's capital plan to the hiring weakness seen elsewhere in this briefing.

Consensus view: TSMC chief executive C.C. Wei told analysts that AI demand is "far above our capability today to supply", and the company said capital spending in 2026-28 will "significantly exceed" the 2023-25 total. The five largest US technology companies' plans to spend $650-690bn on AI infrastructure this year underpin that view.

Counter-view: IMF managing director Kristalina Georgieva warned earlier this year that AI valuations were approaching the levels of the internet boom 25 years ago. In China, Tencent and Baidu took opposite paths on AI capital spending in the second quarter, a sign that not every large buyer is committing at the same pace.

Key tension: Whether TSMC's order book reflects durable demand from AI services that earn money, or a capital spending race among a few buyers that could stall together.

Sources:CRN Asia

Mentions:TSMC →Taiwan →Baidu →Kristalina Georgieva →China →Executive Yuan →Tencent Holdings →ESMC →Dresden →Arizona →

First Reported In

Update #21 · AI marks French hiring and Accenture's 10-K

CRN Asia· 22 Oct 2026

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Different Perspectives

TSMC

The chipmaker raised its 2026 revenue growth forecast to about 44% on 15 October while holding capital spending at $60-64bn. High-performance computing, mostly AI data-centre chips, made up 68% of quarterly revenue, so demand for the hardware behind automation is still rising.

South Korean government

Its statistics office published the first youth figures on the 15-to-34 band set by a revised law, showing a fall of 98,000 against 147,000 on the old band. Including people in their early thirties, whose employment rose, makes the official youth decline look gentler.

Office for National Statistics

The ONS put UK vacancies at 691,000 for July to September and professional, scientific and technical vacancies 11.6% lower on the year. In September it had shown the same sector still adding jobs, so the fall appears in adverts before it reaches headcount.

Chinese government

Officials told a State Council Information Office briefing on 10 October that 10.52 million new urban jobs had been created by September, 87.7% of the annual target. Official figures show investment falling overall but rising in networks, data services and robot output, with urban unemployment at 5.2%.

Tharman Shanmugaratnam

Singapore's President, co-chair of the World Bank Jobs Council, urged governments at the Bangkok meetings to make crisis-era youth employment support a standing policy tool. That treats young workers' AI exposure as a lasting budget line rather than a shock to ride out.

Srini Pallia, Wipro

Wipro's chief executive called AI a long-term growth driver as the company cut 6,716 staff on flat revenue. HCLTech and TCS added staff in the same quarter, so Wipro's cut sits beside its own weak revenue rather than an industry-wide fall.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.