AI bubble concerns mount, TSMC delivers reassurance: Capital expenditure will far exceed $100 billions over the next three years

TSMC announced strong third-quarter results and signaled future investments far exceeding market expectations.

On October 15, TSMC released its third-quarter financial report, with quarterly revenue reaching $46.6 billion, a 16% increase quarter-over-quarter, and about 2% higher than the consensus forecast by Bloomberg. The company’s fourth-quarter revenue guidance midpoint is $53.3 billion, about 6% above consensus, with full-year growth guidance of 44%.

What attracted even more market attention was that management confirmed that 2026 capital expenditures would remain between $60 and $64 billion, and further specified that total capital expenditures for 2026–2028 would significantly exceed the historic total of about $101 billion for 2023–2025.

According to Chasewind Desk, on October 16, the JPMorgan Mio Shikanai team published a report stating that the company's management not only maintained near-term capex guidance but also extended capex certainty through 2028 and even toward 2030, providing semiconductor equipment vendors with long-term order visibility beyond a single fiscal year.

JPMorgan pointed out that equipment vendors with a higher revenue proportion from wafer foundry customers will benefit most directly. Against the backdrop of strong equipment demand and tight supply, TSMC’s proactive sharing of investment plans with suppliers helps alleviate short-term supply chain pressure and further solidifies the strategic position of leading equipment vendors.

TSMC management disclosed a detailed timetable for capacity expansion. In Taiwan, the company plans to build 13 advanced chip and advanced packaging wafer fabs. Overseas, an additional five to six wafer fabs are planned.

From the perspective of process nodes, A14 technology is expected to enter risk trial production in 2027 and begin volume production in 2028. For the N2 process, the company plans to double capacity by 2027. The N3 process expansion is more aggressive than previously anticipated.

The original new plant in Tainan is scheduled to come online in the first half of 2027, but due to strong customer demand, management decided to build an extra Tainan plant, which is expected to start mass production in the first half of 2028.

As for overseas, construction of the second wafer fab in Arizona, USA, has been completed and is currently in the equipment installation phase. Management plans to start mass production in the third quarter of 2027, slightly ahead of the initial schedule.

Japan’s Kumamoto second wafer fab (JASM) is expected to start N3 process mass production in 2028. The company is also continuing to advance the comprehensive switch from N5 to N3.

Although the 2026 capex range remains unchanged at $60–64 billion, management has delivered an even more positive signal regarding medium- and long-term capex trends.

TSMC explicitly stated that cumulative capex for 2026–2028 will be far above the approximately $101 billion total of the past three years, showing an even steeper investment acceleration curve.

Management also proactively mentioned that the company plans to start introducing High-NA EUV (high numerical aperture extreme ultraviolet) lithography equipment around 2030, and that capital expenditure at that time could significantly exceed current levels.

Currently, equipment, materials, and labor costs are all rising rapidly, but management said that with steady progress on investment, revenue growth should continue to outpace capex growth.