[Edaily Reporter Shin Ha-yeon ] Taiwan’s TSMC, the world’s largest foundry (semiconductor contract manufacturer), has tempered concerns about the AI semiconductor market reaching its peak by reporting record-breaking earnings that far exceeded market expectations and raising its forecasts for annual revenue and capital expenditures. On the 16th, South Korean semiconductor stocks plummeted due to profit-taking, but the sentiment is that the industry’s growth momentum will continue, as TSMC—which effectively holds a monopoly on AI semiconductor production—has embarked on a large-scale investment expansion based on medium- to long-term demand.

On the afternoon of the 16th, TSMC announced that its net profit for the second quarter of this year (April–June) was NT$706.6 billion, up 77.4% year-over-year and 23.4% quarter-over-quarter. This figure significantly exceeds the forecast of NT$632.6 billion (approximately 29.1 trillion won) compiled by financial information provider LSEG based on estimates from 18 analysts.

Revenue reached NT$1.2704 trillion, up 36.0% year-over-year, while operating profit rose 65.4% to NT$766.6 billion. The operating profit margin stood at 60.3%, up 10.7 percentage points from the same period last year, surpassing the 60% mark for the first time. Revenue from high-performance computing (HPC) surged 20% from the previous quarter, reaffirming the robust demand for AI.

In particular, the market focused on the strong outlook for the future, which was even more promising than the current results. TSMC projected third-quarter revenue of $44.6 billion to $45.8 billion, exceeding market expectations. The company also raised its annual revenue growth forecast in U.S. dollars from the previous range of “over 30%” to slightly above 40%. This reflects the company’s assessment that AI semiconductor demand alone is sufficient to fully offset the slowdown in business-to-consumer (B2C) demand, such as for smartphones.

The company also raised its capital expenditure plan from the previous range of $52–56 billion to $60–64 billion. It plans to allocate 70–80% of the total investment to leading-edge processes and 10–20% to advanced packaging and testing. This move signifies an expansion of production capacity that takes into account not only short-term performance but also demand projected for the second half of 2027 and beyond.

The company also announced plans to significantly increase local investment to expand semiconductor production capacity in the United States. During the earnings call, TSMC Chairman Wei-Jer-Tsa stated, “We have decided to invest an additional $100 billion (approximately 147.8 trillion won) in Arizona,” adding, “This is to support the strong long-term demand from major U.S. customers.”

However, the positive impact of TSMC’s strong earnings was not immediately reflected in the South Korean stock market that day. SamsungElectronics(005930)closed at 255,000 won, down 8.77% from the previous trading day, while SK hynix(000660)closed at 1,842,000 won, down 11.53%.

This was due to deteriorating investor sentiment following the previous day’s sharp decline in semiconductor stocks on the New York Stock Exchange—including Micron (-8.0%), SanDisk (-8.1%), and Western Digital (-8.8%)—amid concerns over expanding memory supply from China and a slowdown in data center investment.

Lee Kyung-min, an analyst at DaishinSecurities, noted, “Although TSMC reported better-than-expected earnings and announced plans to expand capital expenditures, the market saw ‘sell-on’ selling pressure.” However, this is largely the result of concerns over expanding memory supply from China and a slowdown in data center investment weighing on short-term investor sentiment, rather than reflecting TSMC’s earnings or the outlook for AI demand.

TSMC’s aggressive capital expenditure is interpreted as demonstrating confidence in future AI semiconductor demand, going beyond short-term earnings improvements. This is why analysts view it as a positive signal for the medium- to long-term AI market outlook, as this year’s increased investment will translate into production capacity starting in the second half of 2027.

Moon Jun-ho, an analyst at SamsungSecurities, stated, “TSMC has once again demonstrated the strength of AI demand through its capital expenditures,” adding, “The fact that a company with a near-monopoly on AI accelerators is increasing its investment so rapidly suggests that TSMC and its customers anticipate a surge in AI demand.” He continued, “A positive outlook remains valid not only for TSMC but also for the entire semiconductor and AI value chain.”