TSMC Q2 Revenue Jumps 36% as CoWoS Packaging Bottleneck Drives Pricing Power

Taiwan Semiconductor Manufacturing Company shares touched intraday all-time highs on Monday after Elon Musk confirmed early-stage talks with the chipmaker about a potential collaboration on his Terafab semiconductor initiative. Musk responded on X over the weekend to a newsletter from tech journalist Tim Culpan, who wrote that TSMC is exploring ways to work with Terafab to help the startup chipmaker run its new semiconductor factories in Texas, saying, "Just discussions, but something may come of it." Terafab is Musk's plan to build a giant semiconductor factory to serve Tesla, SpaceX, and xAI. US chip maker Intel, which joined Terafab back in April, was down roughly 2%. TSMC is the world's largest foundry, and its business has boomed on demand for semiconductors used in artificial intelligence, with the stock up about 60% year to date as the company expands in the US to manufacture chips for clients including Apple, Nvidia, and AMD.

GF Securities expects United Microelectronics to post stronger earnings per share over the next two years on a combination of stronger prices and margins, supported by rising orders from key clients that are lifting utilization rates at its foundry. Analyst Jeff Pu said 12-inch utilization should reach about 93% by end-2026 on strong DDIC volumes from Novatek and Samsung LSI at 22/28nm and Apple's Mac at 55/65nm, with upside from Sony's sensors, while 8-inch utilization should reach about 90% by end-2026 and full loading by 2H27 on intact demand for datacenter PMIC, MCU and embedded memory. Pricing momentum extends from 2H26 for selective customers into 1H27 at 10-30% across 12-inch and 8-inch, and into 2H27 where negotiations are ongoing, suggesting visibility extending into 2H27. GF Securities raised its EPS forecasts for the entirety of 2026 and 2027 by 2% and 8% respectively and maintained its Buy rating, with UMC expected to begin another growth phase in 2028 when it transitions to asset-light FinFET and optical full solutions, driven by Intel 2nm as a major inflection. Interposer and advanced packaging are expected to begin contributing during the second half of 2027, supported by silicon capacitor, DTC, hybrid bonding and controller-to-bonding integration. UMC shares were down 8% in pre-market trading on Monday, but the stock has surged 32% over the past month and more than 230% year-to-date.

Rapidus, which aims to mass-produce advanced semiconductors, announced on the 5th that it will partner with 17 semiconductor design-related companies in Japan and abroad, including Toshiba. The partners include Toshiba Information Systems, a Toshiba subsidiary, as well as Dai Nippon Printing, TOPPAN, and major U.S. semiconductor design firms Synopsys and Cadence Design Systems. The aim is to strengthen its support system spanning everything from the design to the manufacturing of advanced semiconductors in line with customer needs, thereby winning more orders. Going forward, it plans to work with its partners to support customers' semiconductor design and increase the volume of production contracted to Rapidus.

TSMC is considering building a new chip manufacturing plant in Texas, with expectations of adding several tens of billions of dollars in investment under a multi-year plan to expand its chipmaking business in the United States. Sources say the Texas project covers the construction of multiple chip plants, and if the investment goes ahead, each plant would cost at least 20 billion dollars. Previously, TSMC pledged to invest 265 billion dollars in Arizona, where several plants are currently under construction. The Texas investment depends on whether the U.S. government extends a tax credit measure for advanced manufacturing that is set to expire at the end of this year. The plan is still at an early stage and no details have been officially disclosed. TSMC is a key chip supplier to Nvidia and Apple, with revenue from wafer manufacturing in America accounting for more than 75% of its revenue from that business this year.

Wells Fargo says semiconductor capital-equipment companies could be the biggest near-term beneficiaries of a potential TSMC expansion of 2-nanometer production. Analyst Joe Quatrochi wrote that reports of the possible capacity increase should be viewed as a potentially incremental positive opportunity for semi cap companies, though timing, size and node details are still unconfirmed. Building additional 2nm capacity would require significant spending on lithography, deposition, etching and inspection equipment, adding a layer of demand for suppliers supporting TSMC's fabs. Quatrochi pointed to the so-called Silicon Prairie as a logical location for a potential second U.S. campus, citing existing semiconductor operations in Texas from Texas Instruments, Samsung, Coherent and Terafab, plus TSMC's design service center in Austin. TSMC's major 2nm customers include Apple, Nvidia, AMD and Qualcomm, with Google, Broadcom, Marvell, Amazon and OpenAI also expected to use the advanced process.