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TSM · Forward model · Internet of Things · Bear case

What has to happen in Internet of Things

Model as of

This page changes Internet of Things inside the complete TSM model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

TSM forward model
Horizon
Consolidated fair value $201.80 all other verticals held in this portfolio case
Final-quarter revenue $1.58B 3% of company revenue
Explicit segment contribution $10.96B EBITDA less segment capex, before corporate items

The depreciation arrives. TSMC spent NT$496bn on capital expenditure in the basis quarter alone, and its depreciation was FLAT year over year in the first half - NT$359.5bn against NT$359.0bn - because the fabs are not in service yet. That is a timing gap, not a saving, and it closes. Management already guides gross margin down to 65-67% next quarter from 67.7%, citing the 2-nanometer ramp and overseas fabs. This case runs HPC decelerating from 20% sequential while the cost of the capacity built to serve it lands, and prices TSMC as what it is on the balance sheet: a business converting 39% of revenue into plant every quarter.

Internet of Things

Basis quarter$2.01B
Final quarter$1.58B
Implied CAGR−5%
Final revenue mix3%

$2.0B, 5% of revenue, up 4% sequentially. Sensors, connectivity and edge silicon, mostly on mature and specialty nodes rather than leading edge. It grew 35% in one quarter two years ago and fell 15% in another, so the quarter-to-quarter path says less about the platform than about a handful of customers' inventory cycles. At 5% of revenue it is carried because TSMC publishes it, not because it decides anything.

Last four quarters
2025 Q3 $1.66B Estimated
2025 Q4 $1.69B Estimated
2026 Q1 $2.15B Estimated
2026 Q2 $2.01B Estimated
SensorsConnectivityEdge compute
Sequential growth +3.0%/qtr decaying toward +1.5% 3% a quarter against +4% delivered. The eight-quarter path swings from -15% to +35%, so a mid-single digit is the honest read.
Internet of Things

Latest: $1.58B (2031Q2E)

Period Value
2024Q3 $1.65B
2024Q4 $1.34B
2025Q1 $1.28B
2025Q2 $1.50B
2025Q3 $1.66B
2025Q4 $1.69B
2026Q1 $2.15B
2026Q2 $2.01B
2026Q3E $2.01B
2026Q4E $2.00B
2027Q1E $1.99B
2027Q2E $1.97B
2027Q3E $1.95B
2027Q4E $1.93B
2028Q1E $1.91B
2028Q2E $1.89B
2028Q3E $1.86B
2028Q4E $1.84B
2029Q1E $1.81B
2029Q2E $1.79B
2029Q3E $1.76B
2029Q4E $1.73B
2030Q1E $1.71B
2030Q2E $1.68B
2030Q3E $1.66B
2030Q4E $1.63B
2031Q1E $1.61B
2031Q2E $1.58B

Assumptions & reasoning

  • Five percent of revenue and the most erratic sequential path of any platform: +35%, -15%, -9%, +14%, +20%, +3%, +12%, +4% across the eight quarters shown. That is customer inventory rather than end demand.
  • Mostly mature and specialty nodes, so it does not compete for the leading-edge capacity that constrains HPC and smartphone. It is the platform least exposed to the 2-nanometer ramp in either direction.
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