TSMC profit up; packaging now the pinch

Taiwan Semiconductor Manufacturing Co. is heading into its April 16 earnings report with record profit in sight, but the tighter choke point is no longer wafer production. (reuters.com) Analysts polled by LSEG expect first-quarter net profit to rise about 50% from a year earlier to T$347.8 billion, Reuters reported on April 13. TSMC had already said first-quarter revenue climbed 35% to T$1.134 trillion, above market forecasts. (reuters.com, reuters.com) The company’s investor site says the first-quarter 2026 earnings conference is scheduled for Thursday, April 16, and shows guidance of $34.6 billion to $35.8 billion in revenue, with gross margin of 63% to 65%. TSMC also told investors in January that its 2026 capital budget would be $52 billion to $56 billion. (investor.tsmc.com, investor.tsmc.com) Packaging is the assembly step after a chip is fabricated, when the silicon is connected, protected, and tested so it can work inside a server or graphics card. CNBC reported on April 8 that this “advanced packaging” stage has become the next bottleneck for artificial intelligence hardware. (cnbc.com) For the most powerful artificial intelligence chips, that packaging often uses Chip on Wafer on Substrate, or CoWoS, which links several chip pieces and high-bandwidth memory into one module. CNBC reported that Nvidia has reserved most of TSMC’s top-end packaging capacity, while TSMC executive Paul Rousseau said CoWoS capacity is growing at an 80% compound annual rate. (cnbc.com) That helps explain why strong demand at 3-nanometer manufacturing does not automatically mean faster deliveries of finished artificial intelligence systems. Reuters said analysts expect TSMC’s latest results to be driven by demand for advanced nodes including 3-nanometer, even as market coverage increasingly points to packaging and module assembly as the slower step. (reuters.com, wccftech.com) TSMC is expanding that backend capacity in both Taiwan and the United States. CNBC reported that TSMC is building its first United States advanced-packaging facilities in Arizona this year and ramping two new sites in Taiwan. (cnbc.com) The company’s January earnings materials tied that spending surge to customer growth, saying higher capital expenditure tracks with higher growth opportunities in following years. TSMC’s fourth-quarter 2025 call also said revenue was supported by strong demand for its leading-edge process technologies. (investor.tsmc.com, investor.tsmc.com) The immediate test comes on April 16, when TSMC reports first-quarter results and updates investors on how much of the artificial intelligence backlog sits in factories, and how much still waits at the packaging line. (investor.tsmc.com, reuters.com)