TSMC partners with Winbond on AI memory chips to ease HBM supply bottleneck

Citi analyst Atif Malik raised his earnings estimates for Taiwan Semiconductor for the next two fiscal years, writing that another round of consensus earnings upgrades is likely to come for the chipmaker. Malik expects more than 40% year-over-year revenue growth for TSMC into 2027, supported by robust AI compute demand, potential upside from agentic AI, and the new networking cycle of co-packaged optics, or CPO. He also expects TSMC's AI revenue growth to nearly double next year, noting that Nvidia, TSMC's largest customer, has guided to a doubling of its order intake and over 70% year-over-year revenue growth in fiscal 2028, while AMD has guided to over 80% CAGR in its Data Center AI business and Broadcom expects its AI semiconductor revenue to almost double in fiscal 2028. Taiwan Semiconductor shares hit a record high this week and are up 61% year to date, with the company set to report earnings on Oct. 15.

Taiwan's stock market is emerging as a more compelling choice than South Korea's for investors looking to ride the artificial intelligence wave in the final stretch of 2026, after growth in the AI industry began spreading from chipmakers to other businesses across the supply chain. Taiwan's Taiex index has jumped roughly 72% since the start of 2026, the highest among more than 90 global equity indexes tracked by Bloomberg, while South Korea's KOSPI has gained about 63%, ranking second. In the third quarter, the Taiex outperformed the KOSPI by about 23 percentage points, the widest gap since the early 2000s, and earnings estimate upgrades for Taiwanese listed companies outpaced South Korea's for the first time since March 2025. Earnings estimates for companies in the Taiex were revised up by about 19% in the quarter ending in September, compared with an increase of about 15% for KOSPI companies. A Bank of America fund manager survey in September found that about 40% of respondents said they were overweight Taiwanese stocks relative to the benchmark, compared with 25% who held the same view on South Korean stocks. In the survey of 87 fund managers overseeing a combined 211 billion dollars in assets, 35% said Taiwan would be the Asian stock market to benefit most from AI going forward, while only 5% chose South Korea. A key factor is Taiwan's industrial structure, which is linked to the AI supply chain at many levels, from semiconductor design and manufacturing to chip packaging, networking systems and servers. South Korea's market, by contrast, still relies on just a few large chipmakers, particularly Samsung Electronics and SK Hynix, which fell between 19% and 33% in the three months ending in September after six straight quarters of gains. Societe Generale continues to favour Taiwanese stocks over South Korean ones, expecting the rise in memory chip prices to slow over the coming quarters before returning to normal in 2028 amid growing competition from Chinese producers. However, Peter Lee, a managing director at Citigroup, believes investors should start accumulating shares such as Samsung and SK Hynix, because the market may be underestimating demand for high-bandwidth memory chips, or HBM, in 2027. On valuations, Taiwan's market trades at about 18 times forward 12-month earnings estimates, above the KOSPI's roughly 5.5 times. And Taiwan's rally is not confined to Taiwan Semiconductor Manufacturing Co. alone. TSMC shares rose 2.9% in the quarter ending in September, their sixth straight quarterly gain, while about 10% of stocks in the Taiex have at least doubled since the start of the year, compared with just 4.1% of KOSPI stocks and 5.7% of stocks in Japan's Nikkei 225.

Taiwan Semiconductor Manufacturing Company is set to release its third-quarter 2026 earnings report on Oct. 15, with robust artificial intelligence demand and advanced process technology ramp-ups supporting a strong revenue trajectory. TSMC reported July revenues of NT$467.58 billion, up 44.7% year over year, and August revenues of NT$514.81 billion, up 53.3% year over year, for a combined NT$982.39 billion across the two months. The company's third-quarter guidance calls for revenues of $44.6-$45.8 billion, and the Zacks Consensus Estimate sits slightly below the upper end at $45.62 billion, implying 37.8% year-over-year growth. The consensus estimate projects third-quarter EPS of $4.45, signaling 52.4% year-over-year growth, up from $4.03 per share in recent months. TSMC expects third-quarter gross margin of 65%-67% and operating margin of 56%-58%, while management announced an additional $100 billion investment in Arizona for 2nm-and-below logic fabs and advanced packaging facilities.

AT&S Austria Technologie & Systemtechnik AG announced in late September 2026 an expanded collaboration with Marvell Technology to increase advanced IC substrate capacity for next-generation AI and cloud infrastructure. Marvell also affirmed a quarterly dividend of US$0.06 per share payable on October 29, 2026. The deeper manufacturing partnership gives Marvell greater access to complex packaging technologies that are increasingly critical for high-performance AI chips and data center hardware. The new AT&S capacity fits into Marvell's March 2026 plan to commit about US$1.0b in supplier prepayments and long term manufacturing agreements, an effort to lock in scarce substrates for AI optics and complex ICs. Marvell's narrative projects $30.4 billion revenue and $9.6 billion earnings by 2029, requiring 47.5% yearly revenue growth and a $7.0 billion earnings increase from $2.6 billion, while some optimistic analysts see about US$35.7b in 2029 revenue and US$10.1b in earnings.