Summary of TSMC's 2027 Capex Update and Foundry Dynamics Company and Industry Overview - **Company**: Taiwan Semiconductor Manufacturing Company (TSMC) - **Industry**: Semiconductor Foundry - **Date of Report**: January 13, 2026 Key Points and Arguments TSMC's Capital Expenditure (Capex) - TSMC's estimated capex for 2027 has been raised to **US$54 billion**, up from **US$49 billion** in 2026, driven by strong demand for **2nm and AI semiconductors** [1][8][19] - The company is expected to see **EUV (Extreme Ultraviolet) orders increase by approximately 40-50%** from 2026 levels [1][8] Capacity and Production Plans - TSMC plans to convert part of its **Fab 12 and Fab 14** capacity for **interposer production** and may outsource **CoWoS (Chip on Wafer on Substrate) interposer production** to **Vanguard** in 2027 [1][8][9] - The company added **~20kwpm** of its **55nm/65nm capacity** for interposer production in 2025, indicating strong demand for AI semiconductors [9] Market Dynamics and Competitors - **Data center-related PMIC (Power Management Integrated Circuit)** faces shortages, with **SMIC and Vanguard** expected to benefit and potentially increase their **8-inch wafer prices** [1][8] - **Samsung Foundry** is gradually reducing its **8-inch engineering resources** to support leading-edge demand, which may lead to a shift of some display driver IC orders to **UMC** in the second half of 2027 [1][8] Financial Projections and Stock Ratings - TSMC's revenue growth is projected at **30% year-over-year in 2026**, exceeding the Street consensus of **24%** [1][23] - Price targets for TSMC have been raised to **NT$1,988** from **NT$1,888** [1][48] - **UMC** has been downgraded to **Underweight** due to potential investor disappointment regarding wafer price hikes and interposer production [1][8] Foundry 2.0 Concept - TSMC introduced the **Foundry 2.0** concept, expanding its business definition to include both front-end and back-end operations, with advanced packaging revenue approaching **10% of total revenue by 2025** [32][33] Long-term Outlook - TSMC is expected to outgrow the foundry industry due to its leadership position and heavy capex investments compared to peers [1][24] - The company aims to expand its **2nm capacity to 140kwpm by 2027**, with further growth anticipated beyond that [1][24] Additional Important Insights - TSMC's **EUV layer count** for future nodes is not significantly increasing, but the installed base of EUV scanners is expected to accelerate, particularly in 2027 [11] - The report highlights the importance of TSMC's capacity expansion as a key driver for the entire foundry industry's growth and revenue trajectory [19][23] This summary encapsulates the critical insights from the conference call regarding TSMC's strategic direction, financial outlook, and the broader semiconductor foundry landscape.