Taiwan and the chip supply chain: what TSMC's own filings say

TSMC, a contract chip maker with most of its production in Taiwan, says "all the AI players are working with TSMC" (chief executive C.C. Wei, 15 October 2026). Its filings show 74 percent of 2025 wafer revenue came from 7 nanometer and smaller chips, 78 percent of revenue came from ten customers, and new fabs are going up abroad.

This post draws mainly on TSMC's 2025 annual report, its annual report on Form 20-F filed on 16 April 2026, its June 2026 shareholder meeting minutes, and its third quarter 2026 results release and earnings call of 15 October 2026. It explains the terms, shows the figures with dates, and keeps to what the documents say. It is not investment advice.

Key numbers at a glance

• 15.0 million 12-inch equivalent wafers (TSMC shareholder meeting minutes, 4 June 2026): total wafer shipments in 2025, up from 12.9 million in 2024.
• More than 17 million (TSMC 2025 annual report): annual capacity in 12-inch equivalent wafers in 2025.
• 74 percent (TSMC 20-F): share of 2025 wafer revenue from advanced technologies, meaning 7 nanometer and below, up from 69 percent in 2024 and 58 percent in 2023.
• 24, 36 and 14 percent (TSMC 20-F): the 2025 wafer revenue shares of 3 nanometer, 5 nanometer and 7 nanometer.
• 40 percent (TSMC 2025 annual report): TSMC's stated 2025 share of what it calls the "Foundry 2.0" industry, up from 34 percent in 2024. This is the company's own definition.
• 75 percent (TSMC 2025 annual report): share of 2025 net revenue from customers headquartered in North America. China was 9 percent, Japan 4 percent, Europe, Middle East and Africa 3 percent, and Asia Pacific excluding China and Japan 9 percent.
• 58 percent (same report): HPC (high performance computing, which includes AI) share of 2025 net revenue; smartphones 29 percent.
• US$122.42 billion (TSMC, June 2026 minutes): 2025 consolidated revenue, up 35.9 percent; net income US$55.21 billion.
• 78 percent (TSMC 20-F): share of 2025 net revenue from its ten largest customers, with the largest alone at 19 percent and the second at 17 percent.
• US$60 billion to US$64 billion (TSMC earnings call, 15 October 2026): the full year 2026 capital budget, which TSMC said it was reiterating. The 20-F filed in April gave US$52 billion to US$56 billion.
• US$165 billion (TSMC press release, 4 March 2025): total planned United States investment, after adding US$100 billion to an existing US$65 billion.
• US$46.72 billion (TSMC results release, 15 October 2026): third quarter 2026 revenue, up 41.2 percent year on year, with a 66.4 percent gross margin.
• 68 percent (TSMC earnings call, 15 October 2026): HPC share of third quarter 2026 revenue; advanced technologies were 79 percent of wafer revenue.
• About 44 percent (same call): TSMC's expected full year 2026 revenue growth in US dollar terms. A company forecast.
• About 68 percent (TrendForce via Bits and Chips, 18 December 2023): Taiwan's estimated share of global capacity at 16/14 nanometer and below in 2023. Older, third-party and a different measure from TSMC's.

What TSMC actually does

TSMC, the Taiwan Semiconductor Manufacturing Company, is a foundry: a factory that makes chips designed by other companies. It does not sell chips under its own name. Its annual report says it manufactured 12,682 different products using 305 distinct technologies for 534 customers in 2025.

A wafer is the round slice of silicon on which chips are printed, and a "12-inch equivalent" is the unit used to compare different wafer sizes. A node, such as 3 nanometer, is the generation of the manufacturing process. Smaller numbers usually mean more transistors and better efficiency, and they are much harder to produce. HPC is TSMC's label for the platform that includes servers and AI accelerators.

The reason AI depends on this firm is that the biggest AI chip designers do not own factories. They design, and a foundry builds. When one foundry makes a large share of the most advanced chips, that foundry becomes a single point in the supply chain.

How concentrated is it? Two different measures

There is no single official number for "Taiwan's share" of advanced chips, and sources define it differently. The measures below are kept separate.

Company measures from TSMC. TSMC's 2025 annual report says it held 40 percent of what it calls the Foundry 2.0 industry, and that advanced technologies were 74 percent of its own wafer revenue. These describe TSMC, not Taiwan, and the definition is the company's.

A third-party capacity estimate. Bits and Chips, citing TrendForce on 18 December 2023, reported that Taiwan held about 68 percent of global capacity at 16/14 nanometer and below in 2023, rising to 80 percent for processes using extreme ultraviolet lithography. TrendForce projected the share would fall to about 60 percent by 2027 as other regions add capacity, with the United States rising from 12 percent to 17 percent. This is a 2023 estimate and a projection, so it may not match current conditions.

Other commentary puts Taiwan's share of the very newest logic chips higher, around 90 percent. No primary source for that figure is cited here, and this post does not rely on it.

The customer side

Concentration shows up in TSMC's own customers as well as on the map. According to the 20-F, the ten largest customers accounted for approximately 70 percent, 76 percent and 78 percent of net revenue in 2023, 2024 and 2025. The largest customer was 25, 22 and 19 percent over those years, and the second largest was 11, 12 and 17 percent. The 20-F says this concentration partly reflects the shift toward HPC and smartphones.

For a buyer of AI hardware, the implication is that a few firms compete for the same advanced capacity, which is one reason chip supply is discussed alongside cloud capacity. The companion post on AI chip market share looks at who designs those chips.

Where the new fabs are

TSMC says it is spreading its footprint. According to the 2025 annual report and the June 2026 minutes:

• Taiwan. The company runs four 12-inch GIGAFAB fabs, four 8-inch fabs and one 6-inch fab in Taiwan. It says it is preparing multiple phases of 2 nanometer fabs in the Hsinchu and Kaohsiung science parks and will keep investing in leading edge and advanced packaging in Taiwan.
• Arizona, United States. The first fab began volume production of 4 nanometer technology in the fourth quarter of 2024. The second fab's construction is complete and it is designed for 3 nanometer and more advanced technology. The 20-F gave the second half of 2027 for volume production; on 15 October 2026 TSMC said tool move in was under way and volume production would begin in the third quarter of 2027, slightly ahead of its previous schedule. A third fab began construction in 2025, and the company says it has bought a second large piece of land nearby.
• Japan. The first fab in Kumamoto, run through a majority-owned subsidiary called JASM, began volume production at the end of 2024. The second fab is under construction and TSMC plans to use 3 nanometer technology there, with volume production scheduled for 2028 according to the October 2026 call.
• Germany. A specialty technology fab in Dresden, started in 2024, will make 28/22 nanometer planar and 16/12 nanometer FinFET technologies for automotive and industrial uses. Those are older, mature nodes.
• China. A 12-inch fab in Nanjing and an 8-inch fab in China, both wholly owned.

In its press release of 4 March 2025, TSMC said it intended to raise its total US investment to US$165 billion, with three more fabs, two advanced packaging facilities and a major research and development centre, adding US$100 billion to an existing US$65 billion. In the June 2026 minutes the company said its Arizona site could scale to an "independent GIGAFAB cluster."

Advanced packaging is the step that joins the processor and the memory in one package. TSMC's minutes name CoWoS, InFO and SoIC as its packaging and chip-stacking technologies. The minutes say the company will continue to invest in Taiwan packaging capacity. The US plan announced in March 2025 includes two advanced packaging facilities.

The company says the footprint is driven by customer needs, who "value some geographic flexibility, and a necessary level of government support." That is the stated reason, in the company's words.

The risks TSMC lists itself

The 20-F contains the company's own risk language. The points below stay with what it says.

Natural hazards and utilities. TSMC says most of its production facilities, and many of its suppliers' and customers', are in areas susceptible to natural disasters and may face shortages of electricity or water. It says earthquakes struck Taiwan in April 2024 and January 2025, damaging inventories, plants and equipment, and that it recognized approximately NT$3 billion and NT$5.3 billion in losses net of insurance in the second quarter of 2024 and the first quarter of 2025.

Politics and markets. The filing states that the financial markets have viewed certain past developments in relations between the R.O.C. and the P.R.C. as occasions to depress general market prices of securities of R.O.C. companies, including its own. It does not predict any specific development.

Trade rules. The 20-F describes US tariffs and export controls in detail. It says a Section 232 investigation on semiconductor imports concluded in December 2025 with a proclamation imposing a 25 percent tariff on certain advanced computing chips and derivative products meeting specified performance thresholds, unless imported for designated US use. It says a January 2026 US and Taiwan trade and investment agreement would reduce US reciprocal tariff rates on Taiwanese goods to no more than 15 percent and gives preferential Section 232 treatment to Taiwanese chip producers investing in US capacity. It also says the Supreme Court struck down the emergency powers tariffs in February 2026, and that the effects on the preferential treatment are unclear.

Export controls. TSMC states that US controls adopted in October 2022 and October 2023, and new rules in January 2025, may require it to obtain licenses before shipping certain products, and that its China fab faces license requirements for acquiring certain tools. See the timeline of the official export control texts.

The business signals in 2026

In the June 2026 minutes, the company said it expected AI-related demand to stay strong despite macroeconomic uncertainty, and said 2 nanometer entered high volume manufacturing in the fourth quarter of 2025 with good yield. It listed volume production for N2P and A16 in the second half of 2026 and for A14 in 2028. These are company plans.

TSMC's investor pages show net revenue of US$40.20 billion for the second quarter of 2026.

The third quarter 2026 results

TSMC reported its third quarter results on 15 October 2026. According to the release:

• Revenue of US$46.72 billion, up 41.2 percent year on year and 16.2 percent on the quarter. In local currency it was NT$1,494.24 billion.
• Gross margin of 66.4 percent, operating margin of 58.7 percent and net income of NT$763.06 billion.
• Wafer revenue by node: 2 nanometer 8 percent, 3 nanometer 33 percent, 5 nanometer 28 percent and 7 nanometer 10 percent. Advanced technologies, defined as 7 nanometer and below, made up 79 percent of wafer revenue, up from 74 percent for 2025 as a whole.
• Fourth quarter guidance of US$52.3 billion to US$54.3 billion in revenue and a gross margin of 65 to 67 percent. Guidance is a forecast, not a result.

On the earnings call the same day, the company said HPC grew 22 percent on the quarter to 68 percent of revenue, while smartphones were 21 percent. That is a big shift from 58 percent HPC for 2025, and it shows how much of TSMC's business now rides on servers and AI accelerators. TSMC said gross margin fell 1.3 points from the second quarter mainly because of the early 2 nanometer ramp, and that it expects overseas fabs to dilute gross margin by close to 2 points in 2026, widening to 3 to 4 points in the next few years as more US fabs ramp.

Chief executive C.C. Wei said the company now expects full year 2026 revenue growth of around 44 percent in US dollar terms, and that AI demand is supported by AI accelerators, agentic AI CPUs and networking chips. He said TSMC has nearly 20 fabs in progress worldwide, including 13 leading edge and advanced packaging fabs in Taiwan over the next several years and five to six overseas, and that its own teams are checking US data centre build out and power supply. He also noted that consumer and price sensitive segments are under pressure from rising component prices. All of these are company statements and forecasts.

Why this matters beyond chips

AI model makers buy compute from clouds, and clouds buy chips made at a small number of fabs. If a fab is interrupted, the effect travels through chip makers and clouds to everyone who rents capacity. That is why the posts on Anthropic's compute commitments and OpenAI's compute commitments discuss chip supply as part of the cost story.

What is firm and what is uncertain

Firm, because they are in TSMC's filings:

• Revenue, shipment and node share figures for 2023 to 2025, and the reported third quarter 2026 results.
• Customer concentration percentages.
• The fab list and stated construction and production timelines.
• The company's own list of risks and the earthquake losses it recognized.

Uncertain:

• Taiwan's share of advanced capacity. The best available figure cited here is a 2023 third-party estimate with a projection.
• Whether overseas fabs ship on the dates TSMC states. These are plans.
• How trade rules evolve. The filing itself calls the effect of recent tariff decisions unclear.
• Whether full year 2026 growth lands near the 44 percent TSMC expects, and how large the overseas margin dilution becomes.
• Taiwan's share of advanced packaging. None of the sources cited here gives an estimate.

What to watch next

• TSMC's fourth quarter 2026 results and its 2027 capital expenditure guidance.
• Arizona's second fab, now scheduled by TSMC for volume production in the third quarter of 2027.
• Official updates on US semiconductor tariffs and the US and Taiwan agreement.
• Further disclosures about advanced packaging capacity, which is a separate bottleneck.
• New regional capacity estimates from industry trackers.

If your organization depends on software supply chains, as well as hardware ones, you can check open source dependencies with the free scan at https://gold.safeguard.sh/scan.

Quick check

Sources

• TSMC Form 20-F for fiscal 2025, filed 16 April 2026 (SEC)
• TSMC 2025 annual report, chapter 2
• TSMC 2026 annual general meeting minutes, 4 June 2026
• TSMC press release, 15 October 2026: TSMC reports third quarter EPS of NT$29.43
• TSMC third quarter 2026 earnings call transcript, 15 October 2026
• TSMC financial results page, 2026 Q3
• TSMC financial results page, 2026 Q2
• TSMC press release, 4 March 2025: intends to expand investment in the United States to US$165 billion
• Bits and Chips, 18 December 2023: Taiwan continues to dominate the leading edge (citing TrendForce)

Last reviewed: 19 October 2026.