Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) heads into its January 15 earnings report against a backdrop of tightening supply across mature chip markets and rising AI-driven demand, setting the stage for a closely watched update on pricing power and near-term revenue momentum.
At the same time, investors are weighing the company's accelerating U.S. expansion and early advanced-node ramp, with management's 2026 margin outlook expected to be a key focus as overseas investment and capacity shifts come into sharper view.
Wafer Pricing Tightens As Capacity Shrinks
Industry data suggest pricing pressure is building across the mature chip supply.
TrendForce stated that chipmakers are preparing broad price increases for 8-inch wafers of approximately 5% to 20% in 2026, citing supply constraints as Taiwan Semiconductor and Samsung Electronics Co., Ltd. (OTC:SSNLF) gradually phase out less-advanced 8-inch wafers.
TrendForce expects global 8-inch capacity to keep shrinking, forecasting supply down 2.4% in 2026 and 0.5% in 2027, while average utilization rises to 85%–90% from 75%–80% last year as demand for AI-server power chips and front-loaded consumer orders lift fab loading, the Taipei Times reported on Wednesday.
Arizona Expansion Signals Strategic Shift
At the same time, Taiwan is watching Taiwan Semiconductor's U.S. footprint expand.
Taiwan Semiconductor is accelerating its U.S. manufacturing push as Washington ties trade policy and tariffs to domestic chip production and national security goals.
The chipmaker is preparing to significantly expand its Arizona footprint as part of trade talks that would lower U.S. tariffs on Taiwanese goods in exchange for much larger U.S. investment commitments.
The planned expansion builds on the company's existing $165 billion pledge and could add at least five more fabs in Arizona, with longer-term plans that may bring its total U.S. footprint close to a dozen facilities.
By producing advanced logic chips and packaging components in Arizona, Taiwan Semiconductor aims to supply U.S. customers such as Nvidia Corp. (NASDAQ:NVDA) more directly.
The company has already opened its first Arizona fab. It continues construction on additional facilities and has secured adjacent land to support further growth.
The strategy reflects the rising importance of U.S. demand, which now represents more than 75% of Taiwan Semiconductor's revenue.
Economist Liu Pei-chen said a bigger Arizona buildout could push Taiwan Semiconductor toward a dual-hub model (Taiwan and the U.S.), with U.S. capacity potentially nearing local demand for high-performance computing and AI chips, the Taipei Times reported on Wednesday.
That move would be seen as a strategic risk for Taiwan, where many view Taiwan Semiconductor as a critical "silicon shield" because countries such as the U.S. rely heavily on its advanced chips, the report added.
If those chips were instead manufactured and packaged entirely in the United States, Washington's incentive to back Taiwan in deterring a potential Chinese attack could diminish.
She also warned against U.S. build costs hampering profitability, and the geopolitical risks of shifting more advanced production to the U.S.
Earnings In Focus As AI Demand Builds
Attention now turns to earnings due January 15. Taiwan Semiconductor guided fourth-quarter 2025 revenue of $32.20 billion to $33.40 billion, versus Wall Street estimates of $32.63 billion and EPS of $2.76. Third-quarter revenue rose 30.3% year over year to $33.1 billion, topping expectations.
JP Morgan and UBS expect AI-driven advanced-node demand to support results, even as investors assess margin pressure from early N2 ramp and overseas expansion, Futunn reported on Tuesday.
In this earnings report, management's guidance range for 2026 gross margins will become a crucial anchor for profitability expectations, the report added. The market is also awaiting management's outlook on its strategic growth roadmap for 2026.
TSM Price Action: Taiwan Semiconductor shares were down 0.14% at $330.74 during premarket trading on Wednesday. The stock is trading near its 52-week high of $336.42, according to Benzinga Pro data.
Photo via Jack Hong via Shutterstock
