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China mulls export controls targeting TSM, but bull case stays intact
TSMC reported Q2 net profit up 77% year over year to a record T$706.6 billion and has raised its 2026 revenue growth outlook above 40% in US dollar terms, even as China weighs potential chip export restrictions.
On July 21, the Financial Times reported that China’s Ministry of Commerce is considering export controls that would bar Taiwan Semiconductor Manufacturing Company and Qualcomm from manufacturing chips based on designs from Huawei, Alibaba and ByteDance, a move that could pressure the foundry sector, according to Yahoo Finance. The same analysis points to TSMC’s recent financial momentum. In Q2, the company’s net profit rose 77% year over year to a record T$706.6 billion, and revenue increased 36% to NT$1.27 trillion, marking a ninth straight quarter of double digit growth. TSMC has also adjusted its outlook. The company raised full year 2026 revenue growth guidance above 40% in US dollar terms, lifted 2026 capex toward $62 billion, and added $100 billion to its US build out, bringing total American commitments to $265 billion. Separately, Reuters and Bloomberg have reported that TSMC finalized base price hikes of 5% to 10% across advanced and mature nodes starting in 2027. The analysis argues that TSMC’s leverage, including its N2 2nm class gate all around nanosheet transistor process and reliance on US, Europe and Japan suppliers for leading edge manufacturing, is difficult to replace, though the Beijing export control proposal is not yet finalized and the scope has not been confirmed by the companies or China.