Zero One Investment Research Daily Intelligence Brief, October 16, 2026

TSMC builds a 3nm fab it would normally skip; Micron's Taiwan plant sells out 2027

Top Market Signals

TSMC's 2nm share nearly triples in a quarter

TSMC (2330 TT) said 2nm chips made up 8% of wafer revenue in 3Q26, up from 3% in 2Q26. That ramp is why gross margin fell 1.3 percentage points QoQ to 66.4%, even as revenue of US$46.72bn beat the top of its own US$44.6-45.8bn guidance.

Revenue rose 16.2% QoQ in US dollars and net profit set a record for a sixth straight quarter. 3nm was 33% of wafer revenue and 7nm and below 79%. High-performance computing revenue rose 22% QoQ to 68% of the total. Gross profit still grew 15.4% QoQ in NT dollars, so revenue growth outran the margin cost of the new node, Commercial Times reported.

TSMC guided 4Q26 revenue to US$52.3-54.3bn, about 14% QoQ at the midpoint, with gross margin of 65-67%. It raised full-year US dollar revenue growth to about 44%, its third increase this year. The CFO said dilution from overseas fabs will widen to 3-4 percentage points over the next few years as US plants ramp. 2nm capacity in 2027 is planned at more than double 2026.

Chairman C.C. Wei said TSMC will plan 2027 cautiously, because rising component prices and macro uncertainty are weighing on consumer and price-sensitive end markets. He added that small phone chips and large AI accelerators are now ramping on the same new node at once. Our 14 Oct Blade noted AMD's Venice as the first high-performance computing product in 2nm volume production, the same week Counterpoint put 3Q26 smartphone shipments down 20% YoY. How fast AI chips fill the doubled 2027 2nm capacity as phone demand slows decides how long the margin cost lasts.

Linked stocks: 2330 TT, TSM US, AMD US

TSMC adds a 3nm fab it would normally skip

TSMC (2330 TT) will build another 3nm fab in Tainan, with volume production in 1H28, on top of the new 3nm fabs already planned in Taiwan, the US and Japan, Chairman C.C. Wei said on 15 Oct. Wei said TSMC usually stops adding capacity once a node reaches its target, but judged 3nm demand strong for many more years.

TSMC kept 2026 capex at US$60-64bn and said 2026-2028 capex will be significantly higher than in the prior three years. Nearly 20 fabs are under way: 13 advanced fabs and packaging plants in Taiwan and 5-6 fabs overseas. The next node, A14, starts risk production in 2027 and volume in 2028, and Wei said more customers are engaged on it than were at the same stage of 2nm. Commercial Times named fab engineering firms United Integrated Services (2404 TT) and Marketech (6196 TT) among the suppliers taking the construction work.

Wei confirmed that TSMC has sent a team to evaluate a fab in Texas and is in talks with Terafab, the chip plant Elon Musk plans to build, about using its capacity, on the condition that any fab is run by TSMC. Arizona's second fab is finished and will start volume production in 3Q27, earlier than planned. Our 10 Oct Blade reported Musk saying on 7 Oct that Tesla (TSLA US) and SpaceX will build and run Terafab, with TSMC at most subleasing space. TSMC has now stated the opposite condition, so a deal needs one side to give way.

Linked stocks: 2330 TT, 2404 TT, 6196 TT, TSLA US

ByteDance nears a custom chip deal with MediaTek

ByteDance is in final-stage talks to buy custom data center chips from MediaTek (2454 TT), Bloomberg reported citing people familiar with the matter. If signed, ByteDance would become MediaTek's second major data center AI chip customer after Google. Order volume was not disclosed, and MediaTek declined to comment.

ByteDance, like Alibaba and Tencent, cannot buy NVIDIA's most advanced chips under US export controls, and Huawei and other Chinese suppliers cannot meet all of its demand. US rules still allow chip design work for Chinese companies as long as the computing power stays below a set threshold. Bloomberg reported earlier that ByteDance agreed this year to buy millions of AI chips from Qualcomm (QCOM US).

For MediaTek, a large ASIC (custom chip) contract would cut its reliance on phone chips, where global smartphone processor shipments are forecast to fall by double digits in 2026, DigiTimes reported. It also puts MediaTek against Qualcomm and Broadcom (AVGO US) for data center work. The deal depends on the chips staying below the US export threshold, so any tightening of that line would limit what MediaTek can sell to ByteDance.

Linked stocks: 2454 TT, QCOM US, AVGO US

Micron sells out 2027, Phison says everything short

Micron (MU US) opened its second advanced packaging and test plant in Taichung on 15 Oct, and President Manish Bhatia said the plant's 2027 capacity is already sold out. The plant supports volume production of HBM (high-bandwidth memory, stacked beside AI processors).

Micron's cumulative investment in Taiwan now exceeds NT$1.6tn across four sites. Taichung is the largest, combining advanced DRAM, HBM production and packaging. Taoyuan Fab 11E adds next-generation DRAM from end-2027 or early 2028 with High-NA EUV tools, and the Miaoli Tongluo site starts its first phase in 2H27. Micron's latest results showed most of its 2027 HBM capacity already booked, Economic Daily News reported.

The same day, Phison (8299 TT) CEO K.S. Pua called the recent memory selloff over CXMT's claim of a denser 4F² DRAM cell design a story the market made up, since verification, yield and volume ramp all take time. He said supply is severely short and next year "everything is short except orders" (translated from Chinese), and that Phison is choosing which orders to fill.

Our 13 Oct Blade carried Broadcom CEO Hock Tan saying the memory shortage may no longer be a problem a year from now. Micron's sold-out 2027 and Samsung's nearly 80% of 2027 memory under five-year deals (our 14 Oct Blade) point the other way for next year. CXMT reaching volume production at good yield is what would change the 2027 supply picture.

Linked stocks: MU US, 8299 TT, 2408 TT, 000660 KS

SK hynix ties a US NAND fab to China tools

SK hynix (000660 KS) is asking Washington to license more US equipment for its NAND plant in Dalian, China, in return for building a new NAND fab in the US through its US unit Solidigm, Reuters reported citing two people. No company has made NAND flash in the US for years, Tom's Hardware noted.

Dalian is the only plant making the 192-layer NAND used in Solidigm's data center SSDs, and it runs on tools from Applied Materials (AMAT US), Lam Research (LRCX US) and KLA. Its Mod B building, finished in 2023, was never fully equipped because of that year's memory downturn. The US Commerce Department granted a limited authorization for 2026 tool deliveries but has issued none for 2027.

Solidigm wants the extra China output to generate cash for the US fab and is considering an IPO as early as 2027; SK hynix is also in talks to lease part of Intel's Ohio site. SK hynix said it is not considering expanding Mod B and that equipment is brought in under US licenses. Washington has said it will generally not approve tools for expansion or upgrades at foreign-owned China fabs, so the outcome of the request is uncertain.

Linked stocks: 000660 KS, AMAT US, LRCX US

Intel silent on Israel fab output, brands seek backup

An explosion at Intel's (INTC US) Kiryat Gat chip plant in southern Israel on 14 Oct killed two workers and left a third in serious condition, and Intel has not said whether output is affected, DigiTimes reported. PC brands it supplies, including Acer (2353 TT) and ASUS (2357 TT), are looking for other sources, Economic Daily News reported.

The CPU shortage had been easing as PC demand weakened. IDC data show global PC shipments fell 3.8% YoY in 2Q26 and 20.1% YoY in 3Q26, down 9.1% QoQ. Brands can ship fewer Intel-based models and fill the gap with AMD or Qualcomm chips.

Our 12 Oct Blade reported Intel raising PC processor prices since 1 Sep, by 15% to 20% on high-end Panther Lake parts, its third round of increases. Intel's 29 Oct results are the first scheduled point at which it can say whether the plant's output is affected.

Linked stocks: INTC US, AMD US, 2353 TT, 2357 TT

先聲 First Word: Exclusives from Chinese-Language Sources

Holy Stone's Vera Rubin capacitor orders more than double

Holy Stone Enterprise (3026 TT) has seen orders for high-end MLCCs (multilayer ceramic capacitors) more than double since entering NVIDIA's Vera Rubin supply chain; its capacity is full, it is raising prices this quarter, and lead times are 16 to 20 weeks, Economic Daily News reported. Higher-power AI server designs need more high-voltage, high-capacitance parts, while Holy Stone plans only 3% to 4% capacity growth next year. (16 Oct 2026) Source: 禾伸堂輝達 Vera Rubin 訂單塞爆 不僅漲價、備料量還大翻倍

3M buys 4.68% of Genius Electronic Optical for optical networking

3M will invest NT$4.81bn (about US$150m) in a private placement at NT$869.6 a share for 4.68% of Genius Electronic Optical (3406 TT), as a tie-up in high-speed optical communications. Genius, a phone lens maker, is sampling V-groove, socket and prism parts for CPO (co-packaged optics) and expects CPO volume to build over the next two years. (15 Oct 2026) Source: 玉晶光私募引進3M 強化光通訊布局

Foxconn puts US$537m more into its US AI server unit

Foxconn (2317 TT) is investing US$537m in Q-Edge, its wholly owned US subsidiary, 2.86 times the US$188m it added on 21 Aug, taking the total to US$575.2m. Q-Edge runs Foxconn's US assembly sites in Indiana and Houston, Texas, and has been adding AI server capacity as customers signal strong AI demand for next year. (15 Oct 2026) Source: 鴻海砸173億 擴大美國產能