66% Q1 operating margin driven by AI wafer and packaging demand at TSMC

Taiwan Semiconductor Manufacturing Co. posted a 66.2% gross margin and 58.1% operating margin in the first quarter, beating its own targets as AI chip demand stayed strong. (investor.tsmc.com) The company reported first-quarter revenue of $35.9 billion, above its guidance range of $34.6 billion to $35.8 billion. Net income reached NT$572.48 billion for the three months ended in March, up 58% from a year earlier. (investor.tsmc.com) (cnbc.com) The margin beat was notable because TSMC had guided for gross margin of 63.0% to 65.0% and operating margin of 54.0% to 56.0%. It now expects second-quarter revenue of $39.0 billion to $40.2 billion, with gross margin of 65.5% to 67.5%. (investor.tsmc.com) TSMC sits at the center of the AI hardware buildout because it manufactures advanced processors designed by customers including Nvidia and Apple. In the quarter, advanced chips accounted for about 75% of total wafer revenue. (cnbc.com) That mix matters because newer manufacturing nodes and the packaging used to connect AI chips to memory and other components generally carry higher value than older processes. TSMC said first-quarter shipments of 3-nanometer chips made up 25% of wafer revenue, while 5-nanometer contributed 36% and 7-nanometer 13%. (techpowerup.com) Chief Executive C.C. Wei told investors that “AI-related demand continues to be extremely robust.” The company raised its full-year 2026 revenue growth forecast to above 30% in U.S. dollar terms. (cnbc.com) The quarter also extended TSMC’s run of record profitability to a fourth straight quarter. Revenue rose to NT$1.134 trillion, beating analyst estimates compiled by LSEG. (cnbc.com) Investors are watching whether TSMC can keep converting AI demand into margins as it expands manufacturing in Taiwan, Arizona and Japan. For now, the company’s April 16 results showed that the AI spending wave is still flowing through its most profitable lines. (cnbc.com)