Taiwan Semiconductor Manufacturing Company (TSMC) reported a first-quarter gross margin of 66.2% for 2026, marking an increase of 390 basis points (bps) sequentially, driven by cost reductions and higher capacity utilization. This figure exceeded management’s guidance by 120 bps. For the second quarter, TSMC anticipates a further increase to 66.5%, though it expects gross margin dilution of 2% to 3% in the latter half of the year due to the ramp-up of its 2-nanometer technology and overseas manufacturing capacity.
In YTD performance, TSMC shares surged 89.1%, aligning with the Zacks Semiconductor – Circuit Foundry industry, and currently trades at a forward five-year Price/Sales (P/S) ratio of 12.25X, matching the industry average. TSM’s gross margin is expected to align with the corporate average by the second half of the year, while recent geopolitical tensions may affect chemical prices, although financial impacts are yet to be assessed.
Advanced Micro Devices (AMD) plans to invest up to £2 billion over five years in the UK to foster AI innovation and bolster compute resources. Additionally, ON Semiconductor (onsemi) announced an all-stock acquisition of Synaptics valued at approximately $7 billion to enhance its intelligent systems capabilities.
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