TSMC Stock Hits Record High on Strong Demand but Faces Expansion Challenges

TSMC's stock reached a new record high as investors anticipate continued strong demand from major clients like Apple and Nvidia. The stock climbed to NT$2,580, up 3.2%, boosting the company's market value to NT$66.9 trillion. This surge follows reports that key customers have increased orders for 2-nanometre chips by 10% to 20%, prompting TSMC to speed up production capacity expansion. However, meeting this demand will require significant investment, particularly in costly 2nm production and overseas fabrication plants.

TSMC expects to produce roughly 120,000 2nm wafers per month by the end of 2026, surpassing earlier estimates of 90,000 to 100,000. The company is set to bring online five 2nm fabrication plants this year. While Wall Street remains optimistic, with JPMorgan maintaining a Buy rating and raising its price target to NT$3,300, analysts warn that persistent shortages could frustrate customers and encourage them to seek alternatives from Samsung or Intel.

TSMC's capital-spending plan for 2026 has been increased to between $60 billion and $64 billion. Analysts debate the near-term margin durability, as the 2nm ramp and overseas expansion are expected to dilute gross margins by three to four percentage points. Despite this, TSMC plans to raise foundry prices by up to 10% in 2027 to offset higher costs. Investors will closely watch September revenue and third-quarter earnings on October 15 for insights into 2027 capex, 2nm economics, AI demand, and pricing.