Based on the EQUITIES RESEARCH: TAIWAN EMICONDUCTOR MANUFACTURING COMPANY (TSM) and management's updated long-term guidance, here is an analysis of TSMC's projected net income for the next five years (2026–2030).
Forecast Overview: The Path to $100 Billion in Profit
TSMC is poised to nearly double its net income by 2028, driven by a structural shift in demand for AI-related high-performance computing (HPC). Management has raised its long-term revenue CAGR forecast to "approach 25%," with AI revenue expected to grow at a "mid-to-high 50s" percentage annually through 2029.
Below is a projection model based on these guidance figures and current margin profiles.
Year | Revenue Projection (USD) | Est. Net Profit Margin | Est. Net Income (USD) | Key Drivers & Headwinds |
2025 (Act) | $122.4 Billion | 45.0% | $55.1 Billion | Baseline Year. Record margins driven by N3/N5 utilization. |
2026 (Est) | $159.1 Billion | ~42.0% | ~$66.8 Billion | Growth: ~30% revenue growth guidance. Headwinds: Tax rate hike (to 17-18%), N2 ramp dilution (-2%), overseas fab costs (-2%). |
2027 (Est) | $198.9 Billion | ~43.0% | ~$85.5 Billion | Growth: 25% CAGR. N2 enters high-volume production. Arizona Fab 2 volume production begins. |
2028 (Est) | $248.6 Billion | ~44.0% | ~$109.4 Billion | Milestone: Net Income crosses $100B. A16 node adoption peaks. Economies of scale offset overseas costs. |
2029 (Est) | $310.8 Billion | ~45.0% | ~$139.9 Billion | Growth: 25% CAGR maintained by AI ubiquity. Margins: Return to peak efficiency as N2 matures. |
2030 (Est) | $372.9 Billion | ~45.0% | ~$167.8 Billion | Growth: Assumes moderation to ~20% growth. Advanced packaging becomes a major standalone revenue pillar. |
Detailed Analysis by Period
1. The "Investment Year" (2026)
Revenue Growth: Management guided 2026 revenue to grow "close to 30%" in USD terms.1 This is significantly higher than the broader foundry industry forecast of 14%, confirming TSMC is capturing nearly all the value in the AI boom.
Margin Compression: While revenue will soar, net profit margins are expected to compress slightly from the record 45% seen in 2025.
Tax Rate: The effective tax rate will rise from 16% to 17–18%.
Dilution: The ramp-up of the 2-nanometer (N2) node and new overseas fabs (Arizona/Japan) will dilute gross margins by approximately 4–6 percentage points combined.1
Result: Even with margin compression, the sheer volume increase should drive net income to approx. $67 billion.
2. The "Acceleration Phase" (2027–2028)
N2 Pricing Power: By 2027, the N2 node will be the industry standard for AI accelerators and premium smartphones. Historically, TSMC enjoys its highest pricing power 1–2 years into a new node's lifecycle.
Overseas Scale: The "resilience tax" of overseas fabs will begin to normalize. As the Arizona and Kumamoto fabs reach efficient scale, their drag on corporate margins will decrease.
Crossing the $100B Threshold: Assuming the 25% CAGR holds (supported by the forecast that AI revenue will grow >50% annually), TSMC should become the first Asian manufacturing company to generate over $100 billion in annual net profit by 2028.
3. The "Maturity Phase" (2029–2030)
AI Saturation vs. Replacement: By 2029, the initial "training" phase of AI infrastructure may slow, but the "inference" market (running AI on devices) will explode. TSMC's "Foundry 2.0" strategy, which includes advanced packaging, locks customers into its ecosystem for both training and inference chips.
A16 and Beyond: The introduction of the A16 node (1.6nm) in late 2026 will drive the revenue mix in this period.2
Profitability: Management targets a long-term ROE of "high 20s" percent.1 The projection of ~$140B–$167B net income assumes they maintain their dominance without significant antitrust breakups or geopolitical interruptions.
Risks to the Forecast
Geopolitical Disruption: The single biggest risk to this $167 billion income projection is a blockade or conflict in the Taiwan Strait.
Antitrust Regulation: With "Foundry 2.0," TSMC is effectively becoming a monopoly in the AI supply chain. This could invite regulatory scrutiny similar to what Google or NVIDIA faces.
Overcapacity in 2027: If the AI hype cycle cools faster than expected, the massive $52–$56 billion CapEx spend in 2026 could lead to depreciation burdens that crush margins in 2027–2028.