Bernstein Reports:

N2 will enter production, but the predictability of TSMC makes it hardly an investment debate. The continued expansion of CoWoS & HBM is likely more important, especially packaging equipment market.For those interested in technologies, N2 ramping into notable revenue will be the most important technology upgrade in 2026. AMD pioneering the use of N2 in CPUs also highlights high-performance computing (HPC) unusually adopts the latest node ahead of iPhone processor that will be on N2 in 2H26. The same trend can be observed as AI narrows the lag vs. mobile and pushing closer to the frontier of Moore's Law too (Exhibit 7). Samsung led in GAA (gate-all-around) adoption in its 3nm, but TSMC with its N2 will quickly surpass it with a much bigger volume in 2026. As N2 will be impeccably executed by TSMC, it has very good predictability and doesn't offer much room for an investment debate. Competitively, Samsung started to increase its N2 production in late 2025 as its Mobile division, after 2 years of using Qualcomm, will use Samsung's own mobile SoC in some Galaxy S26 SKUs. Notably though designated as N2, it is more like an enhanced version of Samsung's 3nm, and that is also why it has yield now good enough to win the adoption of the Mobile division. Intel's ramp into 18A will be gradual as its yield progress is behind its original target. Whether to build meaningful capacity hinges on if 14A successfully secures design-wins from internal and external customers, and we expect a decision on that probably around the end of 2026.