EARNINGS RESULTS · Q2 2026

TSMC Q2 2026: Revenue Up 33.68%, Operating Margin 60.34%

Results for the quarter ended 2026-06-30 bring the business drivers and cash after investment into focus. Quarterly free cash flow was $9.09 bn. The dated assessment on 2026-10-08 was wait at a reference price of $472.2.

TSMC · TSMPublished October 8, 2026Quarter ended June 30, 2026

Q2 2026: What the Quarter Delivered

Revenue: $40.2 bn
Revenue growth YoY: 33.7%
Operating income: $24.26 bn
Operating margin: 60.3%
Calculated diluted EPS per ADR, IFRS: $4.31

TSMC reported $40.2 bn of revenue in Q2 2026. Revenue rose 33.68% from the comparable prior-year quarter. Operating profit was $24.26 bn, with an operating margin of 60.34%. Reported diluted EPS was $4.31.

TSMC is earning more from the revenue passing through its factories. In the latest reported fiscal quarter, revenue rose from the comparable prior-year period, while operating profit grew faster and the operating margin widened.

How Revenue Reached Operating Profit

The quarter's revenue and operating result imply an operating margin of 60.34%: $60.34 of operating profit for every $100 of revenue, before interest and tax.

Operating margin measures how much revenue remains as operating profit after the costs of running the business.

What the Reported Earnings Include

Other non-operating income: $3.03 bn
Net income, IFRS: $22.37 bn
Diluted ADR-equivalent shares: 5.19 bn shares

Q2 2026 GAAP net income was $22.37 bn. Other non-operating income was $3.03 bn.

Other non-operating income also increased sharply in the latest quarter. Such income can include gains that do not recur, so it should not be carried wholesale into an earnings forecast. Our model excludes investment and disposal gains and separately estimates recurring net interest income; incomplete interest disclosures make that estimate a judgment rather than a precisely calibrated historical measure.

Cash Left After Investment

Operating cash flow: $84.58 bn
OCF less cash PPE purchases, plus PPE sales: $36.74 bn
Quarterly operating cash flow: $24.79 bn
Quarterly cash CapEx: $15.7 bn
Quarterly OCF less cash PPE purchases: $9.09 bn

In Q2 2026, operating cash flow of $24.79 bn less cash capital expenditure of $15.7 bn left $9.09 bn of free cash flow. Operations funded cash investment and left cash after that spending.

TSMC’s factories generate substantial operating cash, but keeping the manufacturing advantage requires substantial equipment spending. In the latest quarter, operating cash increased while cash investment increased more sharply, leaving less cash after equipment purchases than in the preceding quarter.

The quarterly residual subtracts cash purchases of property, plant and equipment from operating cash flow. The trailing cash-flow-after-equipment measure also adds equipment-sale proceeds, so it is distinct from the chart’s purchases-only residual. Neither should be confused with normalized earnings.

The Verdict Recorded on 2026-10-08

Verdict Invest recorded wait on 2026-10-08, using a reference price of $472.2 dated 2026-10-07. This assessment relates to the Q2 2026 results, with a 12-month horizon and stated validity through 2026-11-07.

Confirmation to watch: Continued foundry demand growth supported by TSMC’s technological leadership.
Confirmation to watch: Operating margins remaining resilient as new investment brings depreciation and factory ramp costs.
Confirmation to watch: Operating cash generation strengthening enough to leave more cash after equipment purchases.
Risk to this assessment: Loss of technological leadership that weakens customer demand and sustained profitability.
Risk to this assessment: Persistent margin deterioration as utilization softens or investment costs outrun revenue.
Risk to this assessment: Cash investment persistently exceeding operating cash generation, or disruption linked to Taiwan concentration.

Companies to explore

Verdict: Invest