TSMC Smashes Q1 Revenue Expectations with 8.4% Sequential Growth
TSMC, the world's leading dedicated semiconductor foundry, has kicked off its fiscal year 2026 on a high note, exceeding revenue expectations in the first quarter of this year. According to the company's recent conference call transcript, Q1 revenue increased by an impressive 8.4% sequentially in TWD (Taiwanese dollars) and a 6.4% sequential jump in US dollar terms to reach $35.9 billion.
Financial highlights for the first quarter of 2026 showed gross margin increasing by 3.9 percentage points sequentially to 66.2%, primarily due to cost improvement efforts, high capacity utilization rates, and a favorable foreign exchange rate. Operating margin also saw an impressive growth of 4.1 percentage points sequentially to reach 58.1%.
Breaking down revenue by technology, the company's 3-nanometer process technology contributed 25% of wafer revenue in Q1, while 5-nanometer and 7-nanometer technologies accounted for 36% and 13%, respectively. Advanced technologies (7-nanometer and below) dominated with a 74% share of total wafer revenue.
When it comes to revenue contribution by platform, HPC led the pack, increasing by 20% quarter-over-quarter to account for 61% of TSMC's Q1 revenue. Smartphone revenue, on the other hand, declined by 11%, accounting for 26% of total revenue. IoT and Automotive platforms saw growth and decline, respectively.
TSMC's strong financial performance was underscored by its impressive cash position, with the company ending the quarter with a staggering $106 billion in cash and marketable securities. While current liabilities increased due to accrued liabilities and accounts payable, the company's liquidity remained robust.
Looking ahead, TSMC has provided guidance for Q2 2026, expecting revenue between $39.0-$40.2 billion, representing a 10% sequential increase or a 32% year-over-year jump at the midpoint. Gross and operating margins are expected to be within specified ranges.
TSMC's CFO, Mr. Wendell Huang, highlighted the company's key messages, focusing on Q1 and Q2 profitability. He noted that gross margin exceeded expectations in Q1 due to cost improvement efforts, high capacity utilization rates, and a favorable foreign exchange rate.
