Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR(TSM.US) analyst conference: This year's capital expenditure targets a range of 520 billion to 560 billion U.S. dollars, the Middle East crisis may affect profitability.

On the 16th, TSMC held a post-quarterly earnings conference for the first quarter of 2026. Strong AI demand is driving the second-quarter revenue forecast to reach a historical high. TSMC CEO C.C. Wei stated during the analyst call, "AI demand is extremely strong," and mentioned that the world is currently experiencing the "AI mega-trend." He also pointed out that the company's capital expenditure for the year will be at the higher end of the previously guided range - this statement may help alleviate investors' concerns about the impact of the Middle East situation on AI chip demand. In terms of overseas expansion, TSMC is investing $165 billion in building a chip factory in Arizona, USA. Additionally, the company has revised its manufacturing plans in Japan to produce 3-nanometer chips locally, rather than the previously planned mature process nodes. TSMC's first quarter performance for 2026 showed a 58% year-on-year increase in net profit to NT$572.5 billion (approximately $18.2 billion), surpassing market expectations and marking the company's eighth consecutive quarter of double-digit growth. The company forecasts second-quarter revenue to be between $39 billion and $40.2 billion, significantly higher than the $30.1 billion in the same period last year and the $35.9 billion in the first quarter. The Middle East conflict poses a potential threat to the semiconductor production material supply - the supply chain of critical raw materials such as helium and hydrogen faces the risk of disruption. TSMC stated that the company currently has sufficient safety stock to deal with any supply fluctuations that may occur. Before the earnings release, TSMC's Taipei-listed stock closed at a historic high of NT$2085, a slight increase of 0.2%, with a year-to-date cumulative increase of 35%, outperforming the Taiwan Weighted Index's 28% increase during the same period. The company's current market value is approximately $1.7 trillion, about twice that of Samsung Electronics in South Korea. The company stated that it expects second-quarter sales to be between $39 billion and $40.2 billion, with the market estimating $38.11 billion. The gross margin for the second quarter is expected to be between 65.5% and 67.5%, with the market estimating 64.1%. The operating margin for the second quarter is expected to be between 56.5% and 58.5%. Given the Middle East situation, business planning is being done cautiously. AI demand remains "extremely strong." Customers are still sending very strong demand signals to us. The company's production capacity remains tight. Attention is being paid to the impact of component price increases. The N2 process has entered mass production, and efforts are being made to increase capital spending to enhance N3 capacity to meet strong AI demand. Efforts are being made to increase mature process capacity in Japan and Germany. Plans to gradually close 6-inch wafer fabs are underway. The company will continue to optimize its capacity strategy. Customers are highly focused on the A14 process, with production expected to begin in 2028. Confidence in the strong AI mega-trend over the next three years has led to significantly higher capital expenditures compared to the past three years. Efforts are being made to prepare capacity to meet