TSMC raises capex and AI demand guidance, reinforcing a positive read-across for the European semiconductor equipment chain

Overview

This report is an industry read-across by Goldman Sachs' European Technology Hardware/Semiconductor team based on TSMC's 2Q26 earnings call. The core conclusion is that TSMC's AI/HPC demand, advanced-node capex, long-term Arizona expansion in the US, and advanced packaging demand signals have a positive impact on European AI-related semiconductor companies, mainly ASML, ASMI, BESI, Infineon, and STMicroelectronics.

Core views

The report's four most important views are as follows. First, TSMC's 2Q26 revenue reached the high end of guidance, with HPC/AI applications growing 20% QoQ and contributing 66% of quarterly revenue, indicating that AI-driven demand for leading-edge nodes remains strong. Second, TSMC raised its FY26 revenue growth guidance to slightly above 40% and increased its FY26 capex outlook to US$60-64 billion, benefiting equipment companies tied to advanced-node expansion. Third, progress on the A14 node is on track with volume production planned for 2028, and strong customer interest supports long-term demand for ASML and ASMI in advanced logic nodes. Fourth, TSMC's comments on COUPE and mature-node high-value applications are positive respectively for BESI's Hybrid Bonding solution and for the power semiconductor markets in which Infineon and STM operate.

Analysis framework

The report uses an earnings-call read-across approach, mapping TSMC's revenue mix, capex plans, node roadmap, advanced packaging technology demand, and mature-node expansion direction to the order and valuation logic of European semiconductor equipment, advanced packaging, and power semiconductor companies. The valuation section uses Goldman Sachs' 12-month target prices and multiple-based assumptions for each company.

Methodology notes

• Valuation methodsP/E and EV/EBITDA multiple method

  Derive 12-month target prices using forward earnings or EBITDA multiples

  ASML's target price is based on 32x 2HCY27+1HCY28E P/E; ASMI, BESI, Infineon, and STMicroelectronics target prices are based on CY27E EV/EBITDA multiples.

• Industry read-acrossTSMC earnings call read-across

  Map capex and technology roadmap of a supply-chain leader to beneficiary companies upstream and downstream

  The report maps TSMC's AI/HPC revenue, advanced-node capex, Arizona expansion, COUPE advanced packaging, and mature-node demand to European equipment, packaging, and power semiconductor companies.

• Goldman Sachs methodologyGS Factor Profile

  Compare stock characteristics using growth, financial returns, valuation multiples, and composite metrics

  Goldman Sachs Factor Profile compares stocks' growth, financial return, and valuation characteristics versus the market and sector peers through normalized rankings and percentiles.

• Goldman Sachs methodologyM&A Rank

  Use a score of 1 to 3 to assess the likelihood of a company becoming an acquisition target

  M&A Rank 1 indicates high probability, 2 indicates medium probability, and 3 indicates low probability; for companies rated 1 or 2, the target price may include an M&A component.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASML Holding (ASML.AS)

  Direct equipment beneficiary of TSMC's advanced-node capex, A14 node, and Arizona expansion

  Strengths

  Demand for EUV Low NA tools is supported by leading-edge node expansion; the company plans to increase EUV Low NA capacity by 30% in each of 2027 and 2028.

  Weaknesses

  Highly exposed to the semiconductor capex cycle.

  Comparison

  Among the European AI-related semiconductor equipment companies covered in this report, ASML has the most direct linkage to TSMC's leading-edge node expansion.

  Risks

  EUV delays, capex cyclicality, adverse market share changes.

• ASM International (ASMI.AS)

  Equipment beneficiary related to advanced logic nodes and progress in TSMC's A14 development

  Strengths

  The long-term demand outlook for advanced logic nodes is constructive, with TSMC planning A14 volume production in 2028 and seeing strong customer interest.

  Weaknesses

  Relatively high customer concentration and sensitivity to the semiconductor cycle.

  Comparison

  Compared with BESI, it is more of a beneficiary of front-end process equipment, with the read-across coming from advanced logic nodes rather than advanced packaging.

  Risks

  Worsening semiconductor cycle, stronger-than-expected competition, high customer concentration.

• BE Semiconductor Industries (BESI.AS)

  Beneficiary of TSMC COUPE and rising advanced packaging demand

  Strengths

  TSMC's COUPE technology already uses Hybrid Bonding to stitch different packages, and rising AI data center requirements for energy efficiency and bandwidth benefit related solutions.

  Weaknesses

  Sensitive to the pace of Hybrid Bonding adoption and to customer spending cycles.

  Comparison

  Compared with ASML and ASMI, BESI's read-across is more concentrated on advanced packaging and Hybrid Bonding.

  Risks

  Cyclicality in customer spending, delayed Hybrid Bonding adoption, intensified competition.

• Infineon (IFXGn.DE)

  Beneficiary of AI-related high-value applications driving demand for mature nodes and power semiconductors

  Strengths

  TSMC continues to add mature-node capacity to serve AI-related high-value applications such as power management ICs and CMOS image sensors, validating power semiconductor market conditions.

  Weaknesses

  Still affected by EV adoption, consumer demand, and the macro environment.

  Comparison

  Compared with equipment companies, Infineon's read-across is more about demand validation than capital equipment orders.

  Risks

  Weaker end markets, lower-than-expected EV adoption, worsening semiconductor cycle, prolonged weak consumer demand due to macro headwinds.

• STMicroelectronics (STM; STMPA.PA)

  Indirect beneficiary of AI-related mature-node and power semiconductor demand

  Strengths

  Mature-node expansion and demand from high-value AI applications provide fundamental validation for power semiconductors.

  Weaknesses

  Rated Neutral, indicating relative returns or risk-reward are not as favorable as the Buy-rated names.

  Comparison

  Like Infineon, it is exposed to the power semiconductor read-across theme, but the report maintains Neutral on STM while rating Infineon Buy.

  Risks

  Consumer semiconductor inventory correction may bottom more slowly or quickly than expected, competitors' silicon carbide momentum may accelerate or slow, and current favorable pricing may not be sustainable.

• TSMC

  The source of the earnings read-across in this report, rather than a core rated name in Goldman Sachs' European coverage

  Strengths

  Strong AI/HPC demand, raised FY26 revenue growth and capex guidance, and smooth progress in A14 node development.

  Weaknesses

  Consumer and price-sensitive segments face demand headwinds from rising component costs.

  Comparison

  As the leading foundry player, TSMC's capex and technology roadmap provide demand signals for European equipment and power semiconductor companies.

  Risks

  Demand headwinds in consumer and price-sensitive markets, capex execution, and the pace of advanced-node expansion.

Key data

• TSMC 2Q26 HPC/AI revenue performanceUp 20% QoQ, contributing 66% of quarterly revenueThe share was 61% in 1Q26.
• TSMC FY26 revenue growth guidanceSlightly above 40% in USD termsPrevious guidance was more than 30% YoY growth.
• TSMC FY26 capex outlookUS$60-64 billionPrevious wording was near the high end of the US$52-56 billion range.
• TSMC 2026 capex allocationAbout 70%-80% for advanced nodesThe report believes this creates a near-term positive for semiconductor equipment vendors tied to advanced-node demand.
• Additional TSMC Arizona investmentAbout US$100 billionFor N2 and subsequent nodes and advanced packaging, to meet US customer demand.
• A14 node mass production timing2028 HVMTSMC said A14 development is progressing well and it is seeing strong interest from HPC and SP customers.
• ASML rating and target priceBuy, 12-month target price €2,200Based on 32x 2HCY27+1HCY28E P/E; key risks include EUV delays, capex cyclicality, and adverse market share changes.
• ASMI rating and target priceBuy, 12-month target price €955Based on 25x CY27E EV/EBITDA; key risks include a worsening semiconductor cycle, stronger-than-expected competition, and high customer concentration.
• BESI rating and target priceBuy, 12-month target price €318Based on 33x CY27E EV/EBITDA; key risks include cyclicality in customer spending, delayed Hybrid Bonding adoption, and intensified competition.
• Infineon rating and target priceBuy, 12-month target price €88.0Based on 18x CY27E EV/EBITDA; risks include weaker end markets, a worsening semiconductor cycle, and macro pressure.
• STMicroelectronics rating and target priceNeutral, 12-month target price €58.0/ADR $67.5Based on 13x CY27E EV/EBITDA; risks include the pace of consumer semiconductor inventory correction, changes in silicon carbide momentum, and pricing sustainability.

Impact & implications

In terms of investment implications, TSMC's capex increase and long-term US expansion strengthen visibility on advanced-node equipment demand, especially supporting ASML's EUV tool demand and ASMI's exposure to advanced logic nodes; at the same time, higher AI data center requirements for energy efficiency and bandwidth increase the strategic relevance of BESI's Hybrid Bonding solution. Mature-node expansion serving AI-related high-value applications also provides fundamental validation for demand in the power semiconductor markets where Infineon and STM operate. However, STM remains Neutral, indicating that while the read-across is positive, it is not sufficient to change its relative rating.

Risks

• TSMC mentioned that consumer and price-sensitive segments face demand headwinds due to higher component costs.
• ASML risks include EUV delays, capex cyclicality, and adverse market share changes.
• ASMI risks include a worsening semiconductor cycle, stronger-than-expected competition, and high customer concentration.
• BESI risks include cyclicality in customer spending, delayed Hybrid Bonding adoption, and intensified competition.
• Infineon risks include weaker end markets, lower-than-expected EV adoption, a worsening semiconductor cycle, and macro pressure prolonging weak consumer demand.
• STMicroelectronics risks include the timing of the bottom in consumer semiconductor inventory correction, changes in competitors' silicon carbide momentum, and whether current favorable pricing can be sustained.
• Goldman Sachs has disclosed investment banking, market making, holdings, or other client relationships with multiple covered companies, and investors should read the report together with conflict-of-interest disclosures.

What to watch

• Whether TSMC FY26 capex is executed within the US$60-64 billion range.
• Whether TSMC capex over the next three years is significantly higher than the investment level of the past three years.
• Whether A14 node progress toward 2028 HVM and interest from HPC and SP customers remain sustained.
• The pace of the additional US$100 billion Arizona investment, capacity build-out, and how well it meets US customer demand.
• Execution of ASML's plan to increase EUV Low NA tool capacity by 30% in each of 2027/28.
• The adoption speed of TSMC's COUPE solution and Hybrid Bonding.
• Demand strength for mature nodes in AI-related high-value applications such as power management ICs and CMOS image sensors.
• Whether consumer and price-sensitive semiconductor demand continues to be affected by component cost pressure.