The CEO of Taiwan Semiconductor Manufacturing (TSM) cautioned at the annual shareholders' meeting that despite ongoing global capacity expansion, the company will be unable to meet the AI-driven chip demand for several years to come. He reaffirmed that annual revenue growth in U.S. dollar terms is expected to exceed 30% by 2026.
On June 4th, speaking at the meeting in Hsinchu, Taiwan, the CEO stated that AI usage patterns are rapidly evolving from generative queries towards agentic actions, driving a continuous surge in computing power requirements. He noted, "Our customers, and our customers' customers, continue to give us their positive outlook on the AI industry."
He also announced that employee bonuses are projected to increase by approximately 30% for a third consecutive year, adding that there is "no ceiling" for these bonuses. This addresses external calls for greater profit-sharing during the AI boom.
Taiwan Semiconductor Manufacturing is a core foundry partner for tech giants like Nvidia and AMD. With hyperscale cloud providers' AI-related capital expenditure projected to reach a staggering $725 billion this year, demand pressures remain intense. TSM shares fell 1% on the day, influenced by disappointing earnings guidance from customer Broadcom. The stock has surged over threefold in the past three years, driven by robust growth in its core business.
Sustained Demand Strength and Positive Outlook
The CEO elaborated on the underlying logic of demand persistently outstripping supply. He pointed to a structural shift in AI usage—from early-stage generative queries to agentic AI and instruction-based action models. This increases token consumption for large language model text processing, leading to sustained growth in computing power needs.
"We continue to see rising adoption rates of AI models in consumer, enterprise, and sovereign AI applications," he said. "This trend is driving demand for greater computing power, which in turn supports strong demand for advanced semiconductor chips."
"Our customers, and our customers' customers, continue to give us their positive outlook on the AI industry," he reiterated.
When directly asked by a shareholder about robotics and autonomous driving, and whether he sees something "we don't see," his response was: "Autonomous vehicles are always a future direction, robotics is always a direction." He added a personal note: "I am reaching that age, so I am also working very hard to make robotics succeed quickly."
Regarding visibility for 2030, he stated, "We have considerable confidence, let's just put it that way."
Growth Forecast and Employee Bonus Policy
On performance expectations, the CEO maintained prior guidance: Taiwan Semiconductor Manufacturing's annual revenue growth in U.S. dollar terms is projected to surpass 30% by 2026. The company had already raised its full-year revenue forecast in April and announced increased capital expenditure to meet growing product demand.
Regarding employee bonuses, he disclosed that the company has increased them by about 30% each year from 2023 to 2025, and expects another "approximately 30% increase" for 2026. "We believe this represents a strong return for employees, and this growth has no upper limit," he said.
In his opening remarks, he noted the company achieved record revenue and profit last year, with its stock price rising over 150% in the past year and cash dividends increasing by more than 30%.
Uncertainty on Capital Expenditure Peak
On capital expenditure plans, the CEO reiterated that 2026 spending is projected to be between $52 billion and $56 billion, with an internal preference towards the $56 billion upper limit.
A shareholder posed three questions: How long will this capital expenditure cycle last? When will the peak occur? What signals would prompt a decisive reduction in spending? The CEO's answer was straightforward:
"You ask when the peak period is expected? My honest answer—I don't know either, but the next few years look very good. What indicator would signal a stop? I don't see that indicator right now, that's all I can say."
He did not give a specific timeline but clarified the logic: Taiwan Semiconductor Manufacturing bases its investment pace on forecasts from customers and their downstream partners, and this information chain remains positive. On visibility for 2030, he told another shareholder, "We have considerable confidence, let's just put it that way."
A long-term shareholder asked if customer prepayments imply shared risk. The CEO responded, "It can, but prepayment is not a method that should be used forever." He added, "The pressure is still on us; making a profit is not that easy."
US Progress and Competitive Landscape
Regarding the closely watched deployment of U.S. domestic capacity, the CEO offered a cautious assessment. He said construction progress at the Arizona fab is better than expected, but achieving the goal of locating 30% of its 2-nanometer and below capacity in the U.S. will be "very difficult to achieve," citing U.S. construction worker shortages as one constraint.
He explicitly stated that even with new U.S. capacity, domestic U.S. production alone cannot meet all U.S. client demand, and it will "still take a very long time," without providing a specific timeline. On pricing, he emphasized that TSM will not suddenly raise prices sharply, adding that South Korea cannot replicate its business model in the short term.
High-NA EUV Status
Addressing shareholder concerns about the company's stance on High-NA EUV lithography tools and whether it might repeat Intel's past mistake of not investing in EUV, the CEO directly responded: "We have purchased them, and we are working hard on various R&D efforts, that's all there. But currently we don't need to use them for production."
The reason is high cost. He stated that Taiwan Semiconductor Manufacturing is working to improve production efficiency and reduce costs, and "we will then enter production." He added that the number purchased is "embarrassing to say."
According to prior reports, citing a senior vice president, the company plans for its A13 and A12 processes slated for 2029 not to require High-NA EUV tools. This contrasts with Intel's roadmap to adopt High-NA EUV for its 14A node and beyond starting in 2027-2028.
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