TSMC shares technical analysis: Support test at $390 after margin erosion concerns

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TSMC drops 3.33% as margin risks grow

Highlights

TSMC is committing an additional $100 billion to its U.S. chipmaking expansion, raising total planned investment to $265 billion and scaling advanced facilities to 12 for long-term growth.
Despite achieving record Q2 2026 net income up 77.4% year-over-year and $40.2 billion in revenue, substantial U.S. expansion costs are set to compress gross margins by 2%-4%, narrowing near-term profitability.
Technicals show pronounced short- and medium-term selling pressure with oversold signals, projecting a high probability of further decline toward the $390.42 support zone in coming days.

Cost pressures mount as U.S. investment expands and profits surge

TSMC's announcement of an additional $100 billion investment to expand its chipmaking operations in the United States, increasing its total planned U.S. investment to $265 billion and scaling its advanced manufacturing facilities to 12, has positioned the company for major long-term capacity growth, according to Supplychaindive. While the company posted record second-quarter 2026 results with net income rising 77.4% year-over-year and revenues reaching $40.2 billion amid robust demand, the scale of investment has elevated cost concerns. Finance Biggo noted that rising expenses tied to the U.S. expansion are expected to reduce TSMC's gross margin by 2% to 4%, compressing near-term profitability and shaping investor sentiment. These developments reflect strong operational momentum but add pressure to the company's near-term financial outlook, though price action has remained under broader selling pressure.

Downside momentum prevails as resistance holds and signals turn oversold

TSM is trading below its MA-20 at $415.29 and MA-50 at $411.52 on the hourly chart, while holding above the daily MA-200 at $354.29. The Ichimoku Kijun at $414.17 defines the nearest resistance. Key support is observed near $390.42, with resistance at $413.06. On the momentum side, MACD signals Sell and ADX is Neutral. RSI (37.26), along with Stoch RSI, CCI, and Bull/Bear Power, indicate oversold conditions intraday, showing clear seller dominance. The Awesome Oscillator also supports the current downside bias.

Consolidation likely as downside risk remains amid resistance test

Over the short term, TSM is likely to consolidate within the $390.42 to $413.06 volatility band relative to current levels. Downside risk remains high, with limited probability of a sustained rebound unless price breaks decisively above the resistance around $414.17. If the stock slips below the $390 support zone, further weakness is likely, while a bullish scenario would require a strong breakout to shift momentum.

Anton Kharitonov, expert at Traders Union, points out that TSMC's stock remains technically weak below key short- and medium-term averages. He believes strong quarterly results and long-term investments are overshadowed by immediate cost pressure and negative sentiment. Downside risk dominates until clear resistance is broken. "Unless price reclaims $414.17, the bias remains cautious and I see no reason to chase the rebound."

Previously it was reported that U.S. semiconductor infrastructure is being reinforced through expanded partnerships and substantial investments by major industry players, including TSMC and its peers. With TSMC now escalating its U.S. capital commitment and facing new cost pressures tied to this ramp-up, traders should monitor for any shift in sentiment or price momentum if the stock decisively breaks above or below the current $390.42–$413.06 trading band.

Source of Data: TSM Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.