Summary of TSMC Conference Call Company Overview - **Company**: TSMC (Taiwan Semiconductor Manufacturing Company) - **Industry**: Semiconductor Manufacturing Key Points and Arguments Revenue Growth Projections - TSMC is expected to achieve **30% USD revenue growth in 2026**, driven by increased demand for N3 technology, a stronger ramp of N2, and growth in advanced packaging [1][11] - Revenue growth is projected to continue at **20+% in 2027**, supported by tight capacity in leading-edge nodes and ongoing investments in AI [1][11] Gross Margins and Financial Performance - Gross Margins (GMs) are anticipated to remain around **60% through 2026**, aided by a favorable product mix and higher yields from N3 technology [1][11][36] - GMs are expected to be elevated in **1H26** due to high demand for expedited wafer orders, which carry a significant price premium [1][36] Capacity Expansion and Capital Expenditure - TSMC is entering a **capex upcycle**, with expected capital expenditures of **$48 billion in 2026** and **$55 billion in 2027**, focusing on N2, N3, and US fab expansions [1][51] - N3 capacity is projected to reach **147k wafers per month by the end of 2026**, with significant contributions from capacity conversions and new builds [1][19][57] Datacenter AI Revenue Growth - Datacenter AI revenue is forecasted to grow at a **57% CAGR from 2024 to 2029**, driven by strong demand for GPUs and ASICs, larger die sizes, and higher wafer ASPs [1][29] - By 2029, Datacenter AI could represent over **40% of TSMC's total revenues**, up from mid-teens in 2024 [1][31] Market Position and Competitive Landscape - TSMC is expected to maintain a **95% market share in AI accelerators** during the N2 era, despite competition from Intel and Samsung [1][49] - The company is not experiencing any significant share loss in leading-edge technology, with strong momentum in N2 tapeouts [1][42][49] Risks and Challenges - Key upside risks include stronger-than-expected gross margins and continued demand for N2 and N3 technologies [1] - Downside risks involve potential weakness in AI capital expenditures and increasing competition from Intel [1][11] Upcoming Guidance and Expectations - For **1Q26**, TSMC is expected to guide for flattish revenues quarter-over-quarter, with GMs projected to remain in the **61-63% range** [1][70] - The company will announce its **4Q25 results** on January 15, with expectations for revenues to exceed guidance [1][69] Additional Important Insights - Non-wafer revenues are expected to grow by **44% and 29% in 2026 and 2027**, respectively, driven by CoWoS expansion and increased adoption of advanced packaging technologies [1][21] - TSMC's aggressive capacity expansion plans are in response to strong demand from major clients like NVDA and Apple, indicating robust future growth potential [1][51][68]