---
title: "TSM: AI's Undisputed Leader — Who Can Challenge It?"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/39963709.md"
description: "TSMC reported Q1 2026 results (quarter ended Mar 2026) on Apr 16, 2026 Beijing time, before the US market open. Key takeaways: 1) Revenue."
datetime: "2026-04-16T10:29:47.000Z"
locales:
  - [en](https://longbridge.com/en/topics/39963709.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/39963709.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/39963709.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# TSM: AI's Undisputed Leader — Who Can Challenge It?

TSMC released its Q1 2026 results (through Mar-2026) pre-market in the U.S. on Apr 16 Beijing time. Key takeaways are as follows.

**1) Revenue**: **Q1 revenue was $35.9bn, up 6.4% QoQ**, driven by AI chips as customers began shifting to the 3nm platform. Despite FX headwinds from a stronger USD vs. TWD, revenue topped the high end of guidance ($34.6–35.8bn). **On a TWD basis, revenue rose 8.4% QoQ, clearly ahead of the company's ~6% QoQ guide**.

**Volume/price (12-inch equivalent)**: ① Wafer shipments were 4,174k, up 5.4% QoQ. ② **Blended ASP per wafer (12-inch eq.) was $8,601, up 1% QoQ**.

**2) GPM**: **Q1 GPM was 66.2%, above the guided range (63–65%)**. **Margin expansion was driven by higher ASP and lower unit costs, with scale effects diluting fixed costs per unit**. With AI demand, GPM has firmly held above 60%, and the company has lifted its long-term (5+ yrs) GPM target from 53% to 56%.

**3) Biz. details: nodes, end-markets, and regions**

**a) By node**: $Taiwan Semiconductor(TSM.US) kept advanced nodes (7nm and below) at a high 74% mix. On strong AI demand, 3nm and 5nm were fully loaded, contributing 25% and 36% of revenue, respectively. **As 2nm ramps, AI chips will migrate from 5nm to 3nm, further skewing the mix toward advanced nodes**.

**b) End-market**: QoQ growth was led by AI chips, while smartphones saw seasonal pullback. **HPC remained the largest contributor at $21.9bn, or 61% of revenue, on demand from NVDA, AVGO and other AI customers**.

**c) By region**: North America remained the largest market at 76%, covering NVDA, AAPL, AMD and other key customers. **China revenue was about $2.5bn (7% mix), the third-largest market**.

**4) Capex**: Q1 capex was $11.1bn. **With full-year 2026 capex raised to $52–56bn, the next three quarters could total about $44bn, indicating spending will skew to 2H**.

**5) Guidance**: **Q2 2026 revenue of $39.0–40.2bn (above the raised buy-side at ~$38.8bn) and GPM of 65.5–67.5% (in line with the raised 66–66.5% buy-side)**.

**Dolphin Research view: Full-year guide raised, chain position intact**

**The print was solid, consistent with monthly disclosures**. Q1 revenue of $35.9bn beat the top end of guidance despite USD/TWD headwinds. **On a TWD basis, QoQ growth was 8.4%, an even better underlying run-rate**.

More important this quarter were **GPM, capex, and forward guidance**.

**① GPM**: Q1 GPM reached 66.2%, near the raised buy-side at 66–66.5%, on higher ASP and unit cost declines from scale. Dolphin will break this down in detail in the main text.

**Management guided Q2 GPM to 65.5–67.5%, broadly matching the raised buy-side (66–66.5%)**. AI moving from 5nm to 3nm supports higher blended ASP and margins.

**② Capex**: Q1 capex was $11.1bn. **Full-year 2026 capex was raised again to $52–56bn (from $52–56bn previously stated as a high watermark),** implying roughly $44bn over the next three quarters.

Spending will concentrate in 2H (Avg. ~$14.5–15.0bn per quarter), aligning with ASML's 'back-half weighted' outlook yesterday.

**③ Ops guidance**: **TSMC raised its 2026 revenue growth target to '30%+' (from ~30%)**, signaling confidence and aligning with mainstream expectations.

**Beyond the core metrics, the market is focused on several areas**.

**a) CoWoS capacity**: Leading AI accelerators (NVDA, AMD and TPUs) use CoWoS packaging, and TSMC supplies the vast majority of global capacity (90%+). **Even if chip designers want to ramp, CoWoS allocations constrain AI shipments, making TSMC a choke point in the AI supply chain**.

Industry data and expectations suggest current CoWoS capacity is ~80k wafers/month, potentially reaching ~120k by end-2026. **Dolphin estimates 2026 CoWoS shipments could exceed 1.1mn wafers (+77% YoY), with NVDA and AVGO as key customers**.

**b) 2nm progress and node migration**: 2nm is entering high-volume ramp in 2026, with portions of smartphone demand from AAPL and QCOM moving to 2nm. Meanwhile, AI has fully upgraded to 3nm, and **Rubin, MI350 and Google's TPUv7 will use TSMC's 3nm**.

As the mix migrates to more advanced nodes, blended ASP should rise, and capex will continue to grow.

**C) Foundry competition**: As TSMC starts 2nm volume, Samsung and Intel are following with SF2 (2nm) and 18A (1.8nm), respectively.

**However, gaps remain vs. TSMC**: ① Samsung and Intel's latest nodes have transistor densities under 250 MTr/mm², even below TSMC's prior-gen N3P at 294 MTr/mm². **② Yields at INTC and Samsung remain relatively low and are focused on internal chips,** while TSMC serves a large base of external marquee customers.

**If INTC and Samsung improve yields amid tight AI supply, they could pick up some 'spillover orders'**. With TSMC capacity tight, GOOGL and INTC recently expanded cooperation, partly to ease supply bottlenecks.

**At a ~$1.9tn market cap, TSMC implies ~24x 2026E P/E (assuming +38% revenue, 64.7% GPM, and a 16.5% tax rate)**. Versus its historical 20x–30x band, the current multiple sits slightly below mid-range.

**Back to the print, results were good but not a blowout**. The street has already moved GPM toward ~66%, and Q1 was in line with those revised expectations.

Positively, the quarterly guide was above the raised buy-side. With a full-year revenue outlook in place, next quarter's revenue matters less at the margin. **The 2026 growth target was lifted to '30%+', but as most institutions already expected 30%+, it is not a major surprise. TSMC management has long maintained a conservative guiding style**.

**TSMC is setting record revenues while lifting GPM toward ~66%, underscoring its pricing power in the chain**. In AI manufacturing, its CoWoS capability is a clear edge, capturing nearly all current AI chip production.

**Until INTC/Samsung achieve technical and yield breakthroughs, TSMC remains the only scalable CoWoS option**. Regardless of downstream jockeying, it is the most resilient link in the AI chip chain.

Below is Dolphin's detailed read on the quarter:

**I. Revenue: volume and ASP both higher**

**Q1 2026 revenue was $35.9bn, above the $34.6–35.8bn guide**. Revenue grew 6.4% QoQ on AI demand, with workloads migrating from 5nm to 3nm.

**USD strength vs. TWD diluted the reported growth**. On a TWD basis, revenue rose 8.4% QoQ, indicating stronger underlying momentum.

**Given monthly disclosures, the revenue trajectory was well anticipated**. How did volume and pricing contribute this quarter.

Dolphin breaks down the drivers by volume and price.

**1) Volume**: **Q1 2026 shipments were 4,174k wafers, up 5.4% QoQ**. The company raised 2026 capex to $52–56bn, up $13–15bn YoY, signaling continued capacity expansion.

**2) Price**: **Q1 blended ASP per wafer (12-inch eq.) was $8,601, up 1% QoQ**. With 2nm entering volume and AI workloads shifting from 5nm to 3nm, the mix will further tilt to advanced nodes, supporting higher blended ASP.

**II. Gross profit and margin: marching higher, breaking 66%**

**Q1 2026 gross profit was $23.8bn, up 13% QoQ**. **GPM was 66.2%**, up 390bps QoQ and near the raised street at 66–66.5%, driven by higher ASP and lower unit costs.

Revenue and margin are the two most watched metrics, with revenue largely pre-discounted by monthly prints. Margin was a key focus this quarter, and Dolphin decomposes the main drivers.

**'GP = per-wafer revenue − fixed cost − variable cost'**

**1) Per-wafer revenue (12-inch eq.)**: **About $8,601 per wafer, up $85 QoQ**.

Q1 usually sees seasonal ASP pressure on lower smartphone mix. **But as AI migrates from 5nm to 3nm, blended ASP rose against seasonality**.

**2) Fixed costs (D&A)**: **Avg. fixed cost was ~$1,255/wafer, down $65 QoQ**.

On a TWD basis, total D&A rose QoQ. **But with USD strength, D&A in USD terms was roughly flat, and higher shipments diluted fixed cost per unit**.

**3) Variable costs (other mfg. costs)**: **Avg. variable cost was ~$1,648/wafer, down $240 QoQ**, helped by seasonal normalization in other mfg. expenses.

**Putting it together, per-wafer GP was ~$5,698, up $390 QoQ**. Margin gains came from both price and unit cost improvements.

**III. Wafer mix: AI shifts to 3nm, smoothing quarterly swings**

**3.1 Mix by application**

**HPC remained the largest contributor at 61%**. On NVDA's GB-series and other AI demand, HPC revenue was about $21.9bn, up 18% QoQ, driven mainly by NVDA Blackwell and AVGO TPU shipments.

Smartphones showed seasonal weakness. **Revenue was $9.33bn, down 13% QoQ**. Together, smartphones and HPC made up 87% of revenue.

**3.2 Mix by node**

**7nm and below held at 74% of revenue**, underscoring the importance of advanced nodes. Within this, 3nm was 25% and 5nm was 36%.

**Q1 typically sees seasonal declines as the most advanced nodes (e.g., 3nm) are heavily used by smartphone chips**. After the Q4 peak season, Q1 shipments normally fall QoQ.

**The migration of AI from 5nm to 3nm smoothed this seasonality**, helping revenue grow QoQ in Q1.

**As 3nm smartphone chips move to 2nm, AI chips (Rubin, TPUs, etc.) will increasingly occupy 3nm**. The node mix will continue to shift forward, lifting blended ASP and widening the lead over peers.

**3.3 Mix by region**

**North America remained the largest at 76%**, reflecting deep ties with AAPL, NVDA, AMD, QCOM and others. This underscores strong commercial linkage with the U.S.

Outside North America, Asia-Pacific and Mainland China were the other two major contributors at 9% and 7%, respectively. **Mainland China revenue stayed around $2.5bn this quarter, still a top-three market but now below a 10% mix**.

<End\>

Related Dolphin Research on TSMC

Jan 15, 2026 call notes '[TSMC (Trans): Capex up by ~$10bn YoY, set after talks with downstream](https://longportapp.cn/enN/topics/37841500)'

Jan 15, 2026 earnings take '[TSMC: the real AI heavyweight, who says no](https://longportapp.cn/en/topics/37838079)'

Oct 16, 2025 call notes '[TSMC (Trans): 2nm to start volume by year-end, higher investments next year](https://longportapp.cn/en/topics/35287861)'

Oct 16, 2025 earnings take '[Dominant TSMC: the strongest in the AI era](https://longportapp.cn/en/topics/35285919)'

Jul 17, 2025 call notes '[TSMC (Trans): full-year revenue growth raised to 30%](https://longportapp.cn/en/topics/31917752)'

Jul 17, 2025 earnings take '[TSMC: backbone of semis](https://longportapp.cn/en/topics/31913163)'

Apr 17, 2025 call notes '[TSMC (Trans): 30% of future 2nm capacity to be in the U.S.](https://longportapp.cn/en/topics/28999494)'

Apr 17, 2025 earnings take '[Tariff noise vs. robust guide: TSMC stays steady](https://longportapp.cn/en/topics/28998340)'

Jan 16, 2025 call notes '[TSMC: 2025 capex raised to $38–42bn (Q4 2024 call)](https://longportapp.cn/en/topics/26647770)'

Jan 16, 2025 earnings take '[TSMC: the unshakable anchor](https://longportapp.cn/en/topics/26646538)'

**Risk disclosure and disclaimer:** [**Dolphin disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

### Related Stocks

- [TSM.US](https://longbridge.com/en/quote/TSM.US.md)

## Comments (5)

- **纯属虚构，乱是佳人 · 2026-04-17T00:29:49.000Z**: TSMC
- **新用户_Y5PCpt · 2026-04-16T12:44:59.000Z**: Analyze the highest point of this Bitcoin rebound?
- **hongkong_xk · 2026-04-16T10:56:55.000Z · 👍 1**: It doesn't matter if the earnings report comes out and then it plummets.
  - **巴菲特门徒–巴斐得** (2026-04-16T13:52:08.000Z): Same old rules
- **笑看风云变Profit Pilot · 2026-04-16T10:55:19.000Z**: Bullish