The move followed the TSMC board's May 12, 2026 resolution authorizing a capital increase of up to US$20 billion for TSMC Arizona . This is part of a broader plan to build up to 12 fabrication plants near Phoenix, with total investment potentially reaching $165 billion or more under the U.S.-Taiwan tariff deal . TSMC's first Arizona fab is already producing advanced chips for Apple and Nvidia, and construction on the second and third fabs is underway .

Pricing Power: 5–10% Hikes From 2026 Through 2027

TSMC's ability to raise prices reflects its dominant position in advanced chip manufacturing. Multiple reports confirm the company has notified customers of planned increases:

• 5–10% on advanced nodes (5nm, 4nm, 3nm-class processes) starting in 2026, covering approximately 74% of TSMC's wafer revenue . Some reports indicate the hikes extend to 7nm and legacy nodes .
• Differentiated pricing by application: smartphone processors see 5% increases, CPUs 7%, and AI/HPC processors 10% .
• Further increases in the second half of 2026 and into 2027: TrendForce reports TSMC is eyeing up to a 15% hike on 3nm in 2H26, followed by an additional 5–10% in 2027 .

At the June 2026 shareholder meeting, CEO C.C. Wei warned the AI chip shortage "will persist for years" and signaled that TSMC's "stable pricing" pledge does not mean flat prices — the company is executing measured annual increases rather than sudden spikes . With Nvidia, Apple, and others competing for every 3nm and 2nm wafer slot, TSMC holds the negotiating advantage .

AI Demand Drives >NT$100 EPS and >60% Gross Margins

Analyst projections for TSMC's financial performance are aggressive but grounded in current data:

• EPS of NT$98.02 is the consensus forecast for fiscal 2026, up from NT$65.47 the prior year — a 49.7% increase . The NT$100+ milestone is expected next year, with a consensus of NT$122.38 . Goldman Sachs has raised 2026 and 2027 EPS estimates by 9–15%, predicting EPS will reach NT$100 by 2027 . Citi's estimates for 2027 and 2028 are even higher, at NT$130.72 and NT$165.99 respectively .
• Gross margins exceeding 60% through 2028 are a widely cited bull-case thesis. Goldman Sachs forecasts >60% gross margins through 2028, citing "mild overseas fab dilution" and "continued productivity improvements" . TSMC reported 59.9% full-year gross margin for 2025 and 62.3% in Q4 2025 alone . Management guided Q1 2026 gross margin to 63–65% .

The Caveat: Overseas Fab Dilution Risk

The most significant risk to the margin thesis comes from TSMC's own overseas expansion. A Morningstar equity analyst report from June 2026 notes that management projects gross margin dilution from overseas fabs to widen by 300–400 basis points around 2028–2029, citing inflation and tariffs . This could pull margins lower than the bull case suggests, even as AI demand remains robust.

Putting It Together

TSMC's growth story is well-supported by current data. The Arizona expansion locks in future capacity, pricing power ensures revenue per wafer continues rising, and AI demand provides a multi-year demand floor. The 300–400bp margin dilution risk from overseas fab ramp-up is a meaningful caveat, but most analysts — including Goldman Sachs—still expect gross margins to remain above 60% through 2028 . For investors and industry watchers, the key tension to monitor will be between TSMC's pricing leverage and the rising costs of its global manufacturing footprint.

The move followed the TSMC board's May 12, 2026 resolution authorizing a capital increase of up to US$20 billion for TSMC Arizona . This is part of a broader plan to build up to 12 fabrication plants near Phoenix, with total investment potentially reaching $165 billion or more under the U.S.-Taiwan tariff deal . TSMC's first Arizona fab is already producing advanced chips for Apple and Nvidia, and construction on the second and third fabs is underway .

Pricing Power: 5–10% Hikes From 2026 Through 2027

TSMC's ability to raise prices reflects its dominant position in advanced chip manufacturing. Multiple reports confirm the company has notified customers of planned increases:

• 5–10% on advanced nodes (5nm, 4nm, 3nm-class processes) starting in 2026, covering approximately 74% of TSMC's wafer revenue . Some reports indicate the hikes extend to 7nm and legacy nodes .
• Differentiated pricing by application: smartphone processors see 5% increases, CPUs 7%, and AI/HPC processors 10% .
• Further increases in the second half of 2026 and into 2027: TrendForce reports TSMC is eyeing up to a 15% hike on 3nm in 2H26, followed by an additional 5–10% in 2027 .

At the June 2026 shareholder meeting, CEO C.C. Wei warned the AI chip shortage "will persist for years" and signaled that TSMC's "stable pricing" pledge does not mean flat prices — the company is executing measured annual increases rather than sudden spikes . With Nvidia, Apple, and others competing for every 3nm and 2nm wafer slot, TSMC holds the negotiating advantage .

AI Demand Drives >NT$100 EPS and >60% Gross Margins

Analyst projections for TSMC's financial performance are aggressive but grounded in current data:

• EPS of NT$98.02 is the consensus forecast for fiscal 2026, up from NT$65.47 the prior year — a 49.7% increase . The NT$100+ milestone is expected next year, with a consensus of NT$122.38 . Goldman Sachs has raised 2026 and 2027 EPS estimates by 9–15%, predicting EPS will reach NT$100 by 2027 . Citi's estimates for 2027 and 2028 are even higher, at NT$130.72 and NT$165.99 respectively .
• Gross margins exceeding 60% through 2028 are a widely cited bull-case thesis. Goldman Sachs forecasts >60% gross margins through 2028, citing "mild overseas fab dilution" and "continued productivity improvements" . TSMC reported 59.9% full-year gross margin for 2025 and 62.3% in Q4 2025 alone . Management guided Q1 2026 gross margin to 63–65% .

The Caveat: Overseas Fab Dilution Risk

The most significant risk to the margin thesis comes from TSMC's own overseas expansion. A Morningstar equity analyst report from June 2026 notes that management projects gross margin dilution from overseas fabs to widen by 300–400 basis points around 2028–2029, citing inflation and tariffs . This could pull margins lower than the bull case suggests, even as AI demand remains robust.

Putting It Together

TSMC's growth story is well-supported by current data. The Arizona expansion locks in future capacity, pricing power ensures revenue per wafer continues rising, and AI demand provides a multi-year demand floor. The 300–400bp margin dilution risk from overseas fab ramp-up is a meaningful caveat, but most analysts — including Goldman Sachs—still expect gross margins to remain above 60% through 2028 . For investors and industry watchers, the key tension to monitor will be between TSMC's pricing leverage and the rising costs of its global manufacturing footprint.