Taiwan Semiconductor Manufacturing Co. (TSMC) announced third-quarter 2026 consolidated revenue of NT$1,494.24 billion (US$46.72 billion) and net income of NT$763.06 billion on October 15, 2026, representing year-over-year growth of 50.9% and 68.7% respectively. The results filed with the U.S. Securities and Exchange Commission confirm that commercial shipments of TSMC’s next-generation 2-nanometer process node debuted at 8% of quarterly wafer revenue, underscoring persistent demand across high-performance computing and artificial intelligence accelerators.
Key Takeaways
- Profit Expansion: Net income jumped 68.7% year-over-year to NT$763.06 billion, yielding diluted earnings per share of NT$29.43, or US$4.60 per American Depositary Receipt (ADR) unit.
- 2nm Commercial Debut: Shipments of the 2-nanometer node accounted for 8% of total wafer revenue, while advanced nodes (7nm and below) represented 79% of quarterly wafer sales.
- Raised Guidance: Management guided fourth-quarter 2026 revenue to between US$52.3 billion and US$54.3 billion, projecting full-year revenue growth of approximately 44% in U.S. dollar terms.
Record Q3 Profitability and Margin Expansion
According to TSMC’s Q3 2026 earnings release (Exhibit 99.1) filed on Form 6-K on October 15, 2026, consolidated revenue rose 17.6% sequentially from the second quarter of 2026. In U.S. dollar terms, third-quarter revenue came in at $46.72 billion, exceeding the high end of prior company guidance of $44.6 billion to $45.8 billion.
Operating efficiency and high fab utilization supported robust margins across the board. Gross profit margin for the quarter reached 66.4%, expanding by 6.9 percentage points from 59.5% in the third quarter of 2025. Operating margin rose to 58.7%, while net profit margin reached 51.1%. Diluted earnings per share reached NT$29.43, equivalent to US$4.60 per American Depositary Receipt (ADR) unit, up 68.7% from NT$17.44 in the third quarter of 2025.
| Metric (in NT$ billions unless noted) | Q3 2026 | Q2 2026 | Q3 2025 | YoY Change |
|---|---|---|---|---|
| Net Sales | NT$1,494.24 | NT$1,270.38 | NT$989.92 | +50.9% |
| Gross Profit | NT$992.38 | NT$860.31 | NT$588.54 | +68.6% |
| Income from Operations | NT$876.45 | NT$766.60 | NT$500.69 | +75.0% |
| Net Income | NT$763.06 | NT$706.56 | NT$452.30 | +68.7% |
| Diluted EPS (NT$) | NT$29.43 | NT$27.25 | NT$17.44 | +68.7% |
| Gross Margin | 66.4% | 67.7% | 59.5% | +6.9 ppts |
Wafer Technology Revenue: The 2nm Inflection
The standout structural development in the quarterly filing was the initial commercial contribution from TSMC’s 2-nanometer process technology. Commercial shipments of 2-nanometer process technology accounted for 8% of total wafer revenue in the third quarter of 2026, while 3-nanometer accounted for 33% and 5-nanometer accounted for 28%. The 7-nanometer node contributed 10%, bringing advanced technologies (defined as 7nm and below) to 79% of total wafer revenue.
This follows steady momentum observed during the late summer, where earlier ECMSource coverage tracked TSMC’s August 2026 monthly revenue jump of 53% as AI accelerator demand remained supply-constrained. The rapid adoption of 2nm indicates that hyperscale cloud customers and leading chip designers are transitioning to gate-all-around (GAA) nanosheet architectures to secure performance and power efficiency gains.
| Process Node Technology | Share of Q3 2026 Wafer Revenue |
|---|---|
| 2-nanometer (N2) | 8% |
| 3-nanometer (N3) | 33% |
| 5-nanometer (N5) | 28% |
| 7-nanometer (N7) | 10% |
| Mature Technologies (>7nm) | 21% |
Cash Generation and Q4 2026 Guidance
In addition to operational income, TSMC demonstrated substantial cash generation in its Q3 2026 earnings conference presentation (Exhibit 99.2). Third-quarter free cash flow reached NT$476.56 billion, supported by cash from operating activities of NT$919.77 billion against capital expenditures of NT$443.21 billion. Total cash and marketable securities stood at NT$4,016.98 billion as of September 30, 2026, providing liquidity to sustain global fab expansions.
For the fourth quarter of 2026, management expects revenue between US$52.3 billion and US$54.3 billion, with gross profit margin between 65% and 67% and operating margin between 56.5% and 58.5%. Based on current business visibility, management also expects full-year 2026 revenue to increase by around 44% in U.S. dollar terms. Investors seeking broader context on semiconductor supply chains and capital expenditure dynamics can review our market navigation overview.
Sources
- U.S. Securities and Exchange Commission, Form 6-K: TSMC Q3 2026 Earnings Release and Guidance (Exhibit 99.1), October 15, 2026.
- U.S. Securities and Exchange Commission, Form 6-K: TSMC Q3 2026 Earnings Conference Presentation (Exhibit 99.2), October 15, 2026.
- ECMSource Research: TSMC August Revenue Coverage, September 10, 2026.
- ECMSource Educational Index: Market Structure & Analysis Hub.
Disclosure: This article is for informational purposes only and is not investment advice.