Taiwan Semiconductor Manufacturing Co. beat estimates last quarter as its profit surged 58%, but flagged a potential future hit from rising material costs amid the Iran war.
Revenue was up 35.1% to NT$1.134 trillion (US$35.90 billion), above LSEG SmartEstimates of $1.127 trillion. Earnings per share soared 58.3% to $22.08 (US$3.49).
“Our business in the first quarter was supported by strong demand for our leading-edge process technologies,” said senior VP and CFO Wendell Huang.
“Moving into second quarter 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies.”
The revenue and earnings beats come as TSMC has reportedly begun hiking prices on its advanced chips. It told clients that it would raise prices for these chips from 2026 through 2029, per Taiwanese outlet United Daily News.
The company’s gross margin was 66.2% last quarter, increasing from 58.8% one year ago. TSMC credited this to cost improvement measures, higher capacity utilisation, and a favourable foreign exchange rate.
Its operating margin was 58.1%, up from 48.5%.
Advanced technologies represented 74% of its total wafer revenue, rising slightly from 73%. Shipments of 3-nanometre chips accounted for 25% of water revenue, increasing from 22%.
Prices for some chemicals and gases will likely rise amid the Iran war and closure of the Strait of Hormuz, TSMC chair and CEO C.C. Wei said on an earnings call. “Based on our current assessment, there may be impact to our profitability, but it is too early to quantify the impact.”
The company does not expect its supply chain to be impacted in the near term, however. TSMC has prepared a safety stock inventory of gases like helium and hydrogen, according to Wei.
TSMC’s guidance for the year’s second quarter includes revenue of US$30.0-40.2 billion, with a gross profit margin of 65.5-67.5% and an operating profit margin of 56.5-58.5%.
TSMC (TPE: 2330) shares closed 0.2% higher at $2,085.00, while its United States-listed shares dropped 3.1% to US$363.35 before climbing 0.4% after-hours. Its market capitalisation is $1.66 trillion.
