Taiwan Semiconductor Manufacturing Company raised its 2026 capital expenditure budget to a record $58 billion on Friday, up from a prior range of $44-48 billion, marking the largest annual capex commitment in semiconductor industry history. CEO C.C. Wei told analysts on a special investor call that customer demand for the company's upcoming 2-nanometer N2 process has already exceeded planned 2026 and 2027 capacity.
TSMC American Depositary Receipts climbed 4.8% to a record $228 in U.S. trading, while the underlying Taiwan Stock Exchange listed shares closed up 5.4% in Taipei. The Philadelphia Semiconductor Index rose 3.2% on the news, lifting the broader benchmark to a fresh all-time high. The company's market capitalization now stands at $1.21 trillion, the largest in Asia.
2nm N2 Allocation Closed Through 2027
Wei disclosed that all available wafer slots for the N2 process node through Q3 2027 have been allocated to existing customers including Apple, Nvidia, AMD, MediaTek, and Qualcomm. Apple has booked the largest single allocation for the A20 Pro and M6 chip families, while Nvidia's next-generation Rubin Ultra GPU and AMD's MI400 series will take the second-largest share.
To accommodate excess demand, TSMC announced acceleration of its third Arizona fabrication facility, with first silicon now targeted for Q1 2027 versus the prior Q3 2027 schedule. The Arizona Fab 3 will produce both N2 and the N2P enhancement node and is expected to reach approximately 30,000 wafers per month at full ramp by 2028.
A16 Process Roadmap Confirmed
Wei reaffirmed the company's timeline for the next-generation A16 process node, which incorporates Super Power Rail backside power delivery technology, with risk production targeted for Q4 2026 and high-volume manufacturing beginning in Q3 2027. A16 is expected to deliver an additional 8-10% performance improvement and 15-20% power reduction versus N2P.
Morgan Stanley analyst Charlie Chan raised his TSMC ADR price target to $260 from $230, while UBS's Randy Abrams lifted his target to $250. Wei guided full-year 2026 revenue growth in U.S. dollar terms to "high-30s percent," up from a prior "mid-20s" forecast issued in January. Gross margin guidance was lifted to 56-58% from 53-55%, reflecting better-than-expected pricing power and Arizona ramp efficiency.