TSMC May Raise 2026 Revenue Growth Forecast to 35%

According to Morgan Stanley, TSMC may raise its 2026 revenue growth outlook to around 35%, up from a previous estimate of nearly 30%, during its April 16 earnings call. The firm also expects TSMC to increase its three-year capital expenditure guidance for 2026–2028 to approximately $200 billion, reflecting sustained expansion driven by advanced semiconductor demand.

In its latest report, Morgan Stanley reiterated an “overweight” rating on TSMC, as well as on Gudeng Precision and All Ring Tech. TSMC’s ADR traded largely flat in early U.S. market activity on April 15, following recent gains.

This marks Morgan Stanley’s third report on TSMC this month, supported by stronger-than-expected first-quarter revenue announced on April 10. Quarterly growth was revised upward from an initial estimate of 4% to 8%. Based on fab capacity utilization trends, the firm projects second-quarter revenue could grow by 5% to 10% sequentially.

Morgan Stanley noted that robust demand for AI-related semiconductors—including XPUs, networking chips, and CPUs—is offsetting continued weakness in smartphone-related components. This trend could support stronger full-year performance and potentially lead to upward revisions in TSMC’s annual revenue guidance.

Capital expenditure is expected to be a central focus of the earnings call. Morgan Stanley views TSMC’s investment plans as a key indicator of growth over the next three to five years, with significant implications for the global semiconductor equipment sector. The firm forecasts total capital spending of about $200 billion over the next three years, including $55 billion in 2026, $65 billion in 2027, and $80 billion in 2028.

Compared to its earlier estimate of $190 billion, the revised outlook reflects a more optimistic scenario, particularly with increased expectations for 2028 spending. Morgan Stanley believes TSMC may shift from its base-case scenario toward a more bullish outlook during the upcoming earnings call.

The report also highlights increased orders for extreme ultraviolet (EUV) lithography tools for 2027, driven by strong demand for 3nm process technologies. Key applications include high-bandwidth memory (HBM) base dies, LPUs, and CPUs.

In advanced packaging, Morgan Stanley noted ongoing industry discussions about whether TSMC should provide compute dies to Intel for EMIB-T packaging. Some customers are evaluating Intel’s EMIB-T technology due to its ability to support larger chip sizes at lower cost compared to CoWoS, which is currently constrained by reticle size limits and tight capacity. However, TSMC is expected to continue expanding its own packaging technologies to meet customer requirements.

In addition to TSMC, Morgan Stanley remains optimistic about its supply chain partners. Demand for EUV mask pods at Gudeng Precision continues to rise, while All Ring Tech is expanding its 3D IC packaging capacity. The firm has recently raised its target prices for both companies, reflecting confidence in their growth prospects within the semiconductor ecosystem.