TSMC Beats and Raises — but a Bigger Capex Bill Extends the Memory-Led Selloff Into a Third Day

Memory Names Lead a Broad Retreat as TSMC's Capex Raise Overshadows Its Beat

Wednesday's U.S. close and Thursday's Seoul close, ranked by move. TSMC's earnings react in Thursday premarket only (down ~4.4%, not yet reflected below); the table captures the last full session's official closes plus Thursday's completed Seoul session.

Why it matters: the same names cushioned Wednesday's session — TSMC essentially flat, Nvidia and Broadcom higher — are the ones now falling hardest in Thursday's premarket on the capex-guidance reaction, per TipRanks. The gap between SK Hynix's Seoul move and its ADR move keeps narrowing as the U.S. float deepens.

TSMC's Record Quarter Comes With a Bigger Ask of Investors' Patience

• TSMC posts record Q2 profit and guides Q3 revenue to $44.6–45.8 billion: Net income rose 77.4% year-over-year to NT$706.6 billion on 67.7% gross margin and 60.3% operating margin; Q3 gross margin is guided to 65–67%, with CFO Wendell Huang flagging a temporary 3–4 point margin hit from 2-nanometer ramp costs, per the earnings call transcript. Why it matters: the beat itself was never in question — Street models had priced a 95% probability of one — so the market's reaction is entirely about what comes next.
• TSMC raises 2026 capex guidance to $60–64 billion, up nearly $10 billion year-to-date: Wei attributed the increase to customer demand pressure and equipment-price inflation, not a change in the underlying AI outlook, per Investing.com's call transcript. Why it matters: a company on 18-to-24-month planning cycles committing another $10 billion is a bet on 2028 demand, not this quarter's — which is exactly why the market wants a multi-year number Wei declined to give.
• TSMC to invest an additional $100 billion in Arizona, roughly four more fabs: CEO Wei cited "strong collaboration and support from our leading U.S. customers and the U.S. federal, state, and city government," per TheFly. Why it matters: it's the clearest sign yet that TSMC's U.S. buildout is customer-demand-led rather than purely a policy concession, even as the timeline for bringing the new capacity online remains unscheduled.

SK Hynix's Pivot to DDR5 Is Both the Selloff's Cause and Its Bull Case

• SK Hynix is slowing its HBM4 ramp to redirect fab capacity toward conventional DDR5: The shift follows lighter-than-expected HBM4 demand from Nvidia, whose next-generation "Rubin" accelerator is running behind schedule while Blackwell (built on HBM3E) stays in heavy demand, per TechPowerUp. Why it matters: it's the specific catalyst behind Monday's record 15.4% Seoul plunge and the memory-sector weakness still working through the tape today.
• Korea Investment & Securities cut its SK Hynix Q2 profit estimate 8% below consensus: The house flagged slower-than-expected HBM4 shipments and heavy reliance on existing HBM contracts as the reasons for the downgrade. Why it matters: it was the specific research note that triggered Monday's selloff, and today's Seoul close shows the estimate cut is still the operative narrative rather than a one-day overreaction.
• Barclays: Micron and SK Hynix could still surge as much as 120% from here: Despite the volatility, the firm argues the structural HBM shortage persists through 2027–2028 and that both stocks remain underpriced relative to the memory upcycle, per TipRanks. Why it matters: it's the clearest bull counter-argument in circulation today — that this week's moves are a re-rating of expectations, not of the underlying demand picture.

CoWoS Stays Tight as TSMC Leans on Price Increases to Fund the Buildout

• TSMC's CoWoS advanced packaging remains sold out with lead times of 52–78 weeks: Wei told analysts the packaging-to-front-end capacity split stays in the "10 to 20" percent range and that the company continues developing lower-cost alternatives, though a production-ready pilot line remains roughly a year out, per the earnings call. Why it matters: packaging, not wafer fabrication, remains the binding constraint on how fast AI accelerators reach customers.
• TSMC is passing through 5–10% price increases on all 7-nanometer-and-below processes: The hikes apply to Apple, Nvidia and Qualcomm alike; AI data-center buyers are expected to absorb the cost, while thinner-margin consumer chipmakers are more likely to pass it downstream to device prices, per Tech Times. Why it matters: it's the clearest evidence TSMC is funding part of its record capex through pricing power rather than margin compression.
• ASML's CFO says the company has room to raise prices further on chipmaking tools: The comment, made a day after ASML's own guidance raise, points to pricing power building across the equipment layer of the supply chain, not just at TSMC, per Reuters. Why it matters: if both the foundry and its equipment supplier are raising prices simultaneously, the AI capex bill keeps compounding at every layer of the chain.

Nvidia's China Shipments Stay "Trivial" as a Hawkish Fed Adds a Second Headwind

• Washington confirms H200 shipments to China remain "trivial" despite approvals: Commerce's Jeffrey Kessler said a small number of chips have reached Chinese buyers under the case-by-case license regime, even as Chinese firms have collectively ordered more than two million units against Nvidia's roughly 700,000-unit inventory, per Tech Times. Why it matters: the volume mismatch shows the reopened China channel is still a rounding error for Nvidia's revenue today, whatever it becomes later.
• The Federal Reserve's hawkish pivot under Chair Kevin Warsh is pressuring richly valued growth stocks: Markets have shifted from pricing rate cuts to bracing for hikes, with the median 2026 rate projection revised up from 3.4% to 3.8%, per Intellectia. Why it matters: higher discount rates compress the valuation multiples semiconductor stocks have carried through the AI buildout, adding a macro headwind on top of today's company-specific news.

Sell-Side Keeps Raising Targets Even as It Warns Expectations Are "Exceptionally High"

• Susquehanna raises its TSMC price target to $600 from $575, keeping a Positive rating: The firm updated its model directly off the Q2 results and raised guidance, per TheFly.
• JPMorgan and Wells Fargo both lift ASML targets — to $2,400 and $2,500 respectively: Both firms cite the company's capacity-expansion plan and pricing power as durable drivers into 2027–2028, per TheFly.
• MarketWatch: TSMC's expectations are now "exceptionally high." A fund manager quoted in the piece argues Thursday's decline reflects profit-taking against a bar that keeps rising every quarter, not doubt about the underlying business, per MarketWatch.

Three More Earnings Prints Test Whether Thursday's Reaction Was a One-Day Event

• Wednesday, July 22 — Texas Instruments reports Q2 earnings. The analog chipmaker's results will be an early read on whether industrial and automotive demand is holding up alongside the AI-driven names, per PR Newswire.
• Thursday, July 23 — Intel reports Q2 earnings. Investors will watch for further detail on 18A yield progress and foundry customer wins after Wednesday's decline, per company disclosure.
• Wednesday, July 29 — Qualcomm reports fiscal Q3 earnings the same day the Federal Reserve announces its rate decision. The pairing sets up a direct test of company fundamentals against the macro headwind flagged today, per Business Wire.