TSMC strain deepens

Taiwan Semiconductor Manufacturing Co. is running so close to full tilt that its most advanced chip and packaging lines are effectively spoken for into 2027. (reuters.com) Analysts told Reuters the company is headed for a fourth straight quarter of record profit when it reports first-quarter 2026 earnings on Thursday, April 16, with net profit expected to rise about 50 percent from a year earlier. TSMC had already posted record first-quarter revenue of NT$1.134 trillion, up 35.1 percent year over year, including NT$415.19 billion in March alone. (reuters.com) (tsmc.com) The squeeze is not just on the wafers, the thin silicon discs where chips are etched, but on packaging, the step that stacks and links multiple chips so artificial intelligence systems can move data fast enough. Reuters reported that demand for 2-nanometer and 3-nanometer production and for Chip-on-Wafer-on-Substrate packaging is largely sold out through 2027. (reuters.com) That bottleneck has widened as Nvidia and other artificial intelligence chip designers shift from single chips to packages that combine graphics processors, high-bandwidth memory, and networking parts in one unit. CNBC reported on April 8 that Nvidia has reserved most of TSMC’s packaging capacity while TSMC races to add new sites in Taiwan and start its first United States packaging build in Arizona. (cnbc.com) Taiwan’s answer has been to keep building around TSMC’s home base, but the land is getting tight. Digitimes reported this week that science parks across Taiwan are nearing full capacity, pushing the government to accelerate new land, power, water, and transport projects tied to semiconductor expansion. (digitimes.com) TSMC is still spending at a pace few manufacturers can match. In January, the company said it would spend US$52 billion to US$56 billion in 2026, with about 70 percent to 80 percent of that budget aimed at advanced process technologies such as 2-nanometer production. (taipeitimes.com) (tsmc.com) The United States push is getting bigger, but it is not immediate relief. TSMC said on March 4, 2025 that it would add US$100 billion to its Arizona plans, taking total United States investment to US$165 billion for three more fabrication plants, two packaging facilities, and a research center. (tsmc.com) Even with that buildout, TSMC’s newest manufacturing still starts in Taiwan first. The company says its 2-nanometer process entered volume production in the fourth quarter of 2025, and that node is being scaled inside the Taiwan network before equivalent overseas capacity arrives. (tsmc.com) That leaves customers in a familiar position ahead of Thursday’s earnings: more money flowing into artificial intelligence hardware, and the industry’s most important supplier still constrained by how fast it can add clean rooms, utilities, and packaging lines. (reuters.com) (digitimes.com)