TSMC Commits Higher CapEx in 2026 While Raising Dividend Payouts

Taiwan Semiconductor Manufacturing Company TSM, or TSMC, continues to see strong structural demand from customers, as the use of 5G, artificial intelligence (AI) and high-performance computing (HPC) rapidly expands. The emerging Agentic AI market adds further growth opportunities, prompting the company to continue investing to support its customers’ growth. Reflecting this, management raised the 2026 capital expenditure (CapEx) budget to $60 billion-64 billion from the April guidance of $52-56 billion.

TSMC plans to direct about 70%-80% of its 2026 capital spending toward advanced process technologies. Specialty technologies will receive about 10%, while advanced packaging, testing, mask-making and other areas will account for another 10%-20%.

The company is also expanding its presence in Arizona with an additional $100 billion investment. The plan includes several wafer fabs for 2-nanometer and below technologies as well as advanced packaging fabs. TSMC expects the investment to strengthen the U.S. semiconductor ecosystem and supply chain while supporting high-tech jobs. In Taiwan, the company plans to build 13 leading-edge and advanced packaging fabs over the next several years.

At the same time, the company is focused on steadily increasing its cash dividend on both an annual and quarterly basis. In 2025, TSMC paid New Taiwan Dollar (TWD) 467 billion in cash dividends, with shareholders receiving TWD 18 per share, up 28.6% year over year. In 2026, the dividend is expected to increase to TWD 24 per share, up another 33% year over year.

TSM’s Peer Updates

GlobalFoundries GFS spent $408 million on capital expenditures in the second quarter, net of proceeds from government grants, or roughly 23% of revenue. Management expects full-year CapEx to come in toward the higher end of its 15%-20% range, with investments in additional capacity expected to support growing demand. At the second quarter of 2026-end the company’s cash, cash equivalents and marketable securities totaled approximately $3.3 billion. On July 14, GlobalFoundries paid its first-ever quarterly cash dividend of $0.12 per share, reflecting confidence in its future cash-generating capacity.

Intel INTC is raising its 2026 CapEx outlook on strong customer demand signals and now expects spending to exceed $20 billion, significantly above its initial expectations for the year. The company is also moving quickly to secure tool purchase orders from vendors, accelerate clean room build-outs and secure supplies of substrates and memory. The vast majority of 2027 capital spending is expected to go toward its U.S. network. Management stated that from 2021 through 2026, the company’s total spending on tools and space in the United States is approaching $100 billion, significantly more than any other semiconductor company over that period.

The Zacks Rundown for TSM Stock

Over the past 12 months, TSMC shares have rallied 78.5% compared with the industry’s 76.8% growth.

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TSM currently trades at a forward, five-year Price/Sales (P/S) of 10.90X compared with its historical median of 8.12X and the industry average of 10.81X.

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TSMC’s 2026 and 2027 earnings estimates have seen upward revisions over the past 90 days. 

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TSMC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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