TSMC — Q2 2026 Earnings Release + Quarterly Management Report
Full Q2'26 print (primary, TSMC IR): GM 67.7% above the 65.5-67.5% guided ceiling, OpM 60.3%, revenue US$40.20B/NT$1,270.38B at top of guidance, HPC 66% (60->61->66 progression), Q2 capex US$15.70B/H1 US$26.80B, 2nm 3% of wafer revenue with N2-ramp dilution active.
TSMC — Q2 2026 Earnings (reported 2026-07-16)
The Q2 2026 print that resolves the margin question the June-2026 monthly 6-K left open. All P&L, platform-mix, node-mix, capex and Q3-guidance figures below are primary — from TSMC's own 2Q26 Earnings Release and Quarterly Management Report (both dated 2026-07-16). Call-commentary and consensus items are labelled attributed.
P&L — actuals vs guidance
| Metric | Q2'26 actual | Q2'26 guided | Result |
|---|---|---|---|
| Gross margin | 67.7% | 65.5-67.5% | +0.2pp above ceiling (+1.5pp QoQ) |
| Operating margin | 60.3% | 56.5-58.5% | +1.8pp above ceiling |
| Revenue (US$) | $40.20B | $39.0-40.2B | top of band |
| Revenue (NT$) | NT$1,270.38B | — | +36.0% YoY / +12.0% QoQ |
| Net income (NT$) | NT$706.56B | — | +77.4% YoY / +23.4% QoQ |
| Net profit margin | 55.6% | — | vs 50.5% (1Q26), 42.7% (2Q25) |
| Operating income (NT$) | NT$766.60B | — | +65.4% YoY |
| Diluted EPS | NT$27.25 (US$4.31/ADR) | — | +77.4% YoY |
| Opex (% of revenue) | 7.8% | — | vs 8.3% (1Q26), 9.1% (2Q25) |
| Avg exchange rate | NT$31.60 / US$1 | 31.7 assumed | — |
One-off caution on the headline net income. NT$706.56B (+77.4% YoY, the "record" the outlets led with) is flattered by a one-off: non-operating items were a NT$95.83B gain, of which NT$63.20B was the disposal + mark-to-market gain on Vanguard International Semiconductor (VIS) shares (the 8.1% VIS sale, 2026-05-15). Stripping the one-off puts net income at ≈NT$643B (≈+62% YoY) — still a record. The operating story is clean: GM 67.7%, OpM 60.3% and operating income NT$766.60B (+65.4% YoY) are all operating metrics untouched by the VIS gain.
The dilution-vs-pricing-power mechanic (arithmetic only, no call)
Management guided FY2026 gross margin to face 2-3pt of N2-ramp dilution + 2-4pt of overseas-fab dilution [carried from Q1'26 call coverage; summary-derived]. The primary text confirms both drags are live this quarter, not deferred:
- The MR's Gross Profit Analysis: GM 67.7% was "primarily due to cost improvement efforts and a higher capacity utilization rate, partially offset by margin dilution from overseas fabs."
- Days of inventory rose 7 days to 87 "primarily due to N2 ramp"; the CFO's forward comment flags "the steep ramp-up of our 2-nanometer technology" into Q3. 2nm was 3% of wafer revenue in Q2.
So margin cleared its own guided ceiling with both structural drags already active — the cost/utilization lever is currently outrunning the dilution lever. Applying management's own full-year drag ranges (4-7pt combined) back onto the reported 67.7% implies an underlying, pre-dilution GM capability in roughly the ~72-75% region — label this an implied range, not a reported figure (TSMC does not disclose the quarter-specific dilution split). What it says about pricing power / who bears the toll is left open.
Capex / cash
- Q2'26 capex: US$15.70B (Q1'26: US$11.10B); H1/YTD capex: US$26.80B against the FY guide of $52-56B — tracking the high end (H2 is typically the heavier capex half).
- Free cash flow NT$287.36B (down NT$60.85B QoQ, as capex outpaced the rise in operating cash flow); operating cash flow NT$783.36B; capex NT$496.00B in NT$ terms.
Node mix (primary)
Advanced nodes (≤7nm) were 77% of wafer revenue. Mix: 2nm 3% / 3nm 30% / 5nm 33% / 7nm 11%. Wafer shipments 4,336 kpcs.
Platform mix (primary — Net Revenue by Platform table)
| Platform | 2Q25 | 1Q26 | 2Q26 | QoQ rev change |
|---|---|---|---|---|
| HPC | 60% | 61% | 66% | +20% |
| Smartphone | 27% | 26% | 22% | -4% |
| IoT | 5% | 6% | 5% | +4% |
| Automotive | 5% | 4% | 4% | +15% |
| DCE | 1% | 1% | 1% | +5% |
| Others | 2% | 2% | 2% | +5% |
HPC 60% -> 61% -> 66% is the primary four-quarter progression; HPC revenue grew +20% QoQ, the biggest platform mover, while Smartphone fell to 22% in a seasonally soft quarter. (Note: a "51 -> 53 -> 61 -> 66" chain circulated from call coverage; the 51%/53% intermediate rungs are summary-derived and do not square with the primary 2Q25 = 60% — resolve toward the primary table.)
Q3 2026 guidance (primary)
Revenue US$44.6-45.8B; GM 65-67%; OpM 56-58%; FX assumption 1 USD = 32 NTD. The Q3 GM guide (65-67%) sits below the Q2 actual (67.7%) — mechanically consistent with a steeper N2 ramp in H2 (stated as fact, not a call).
Attributed / call-derived (not primary)
- FY2026 capex reaffirmed toward the high end of $52-56B; FY26 revenue growth >30% USD reaffirmed; AI demand "extremely robust" [summary: preview/call coverage, 2026-07-16].
- CoWoS sold out through 2027 — call/slide-resident, not in the filings [carried, not re-verified].
- TSMC reportedly "pushing back on ASML's pricing plan" [attributed: The Information via FinancialJuice, 2026-07-16] — relevant to the capex-as-order-book chain; flagged, not verified.
- Consensus context: net income NT$706.56B beat the LSEG SmartEstimate ~NT$632.6B (~11-13% profit beat); GM 67.7% vs ~67.1% Street [tradingkey / FinancialJuice, 2026-07-16].
- At-release tape reaction was muted ("no significant change ... the market is waiting for the earnings conference") [tradingkey, 2026-07-16].
Limitations
- Call/slide-resident items (CoWoS forward booking, whether FY targets were formally raised vs reaffirmed, ASML pricing pushback) are attributed, not primary — they are structurally not in the filings.
- Post-conference ADR / 2330.TW reaction prints after research time; not captured here.
Source: TSMC 2Q26 Earnings Release + Quarterly Management Report (investor.tsmc.com, dated
2026-07-16). Figures transcribed from the research-layer reaction delta:
menfem-research/companies/tsmc/deep-dive-2026-07-16-reaction.md (which fetched both IR PDFs
directly). Not re-fetched here, per task instruction.