Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, announced during its latest investor conference that it will maintain its 2025 revenue guidance of 24–26% growth, despite rising concerns over U.S. tariff policy under President Donald Trump’s administration. This statement reflects the company’s confidence in its AI-driven product pipeline and strong client relationships, which it believes will buffer the impact of growing geopolitical risks.
Chairman C.C. Wei acknowledged during the conference that new U.S. tariffs—slated to impose up to a 32% duty on imports from Taiwan—pose “market risks,” especially if end-user demand is disrupted. However, he said TSMC’s customers, including global tech giants, have not made any moves to shift their business strategy or contracts with the company.
“We’re watching the policy climate closely, but so far, the fundamentals of AI demand remain extremely strong,” Wei said.
AI Demand Offsets Political Uncertainty
At the heart of TSMC’s optimism is the global AI boom. The company expects demand for graphics processing units (GPUs), high-bandwidth memory (HBM) chips, application-specific integrated circuits (ASICs), and AI accelerators to double in 2025.
TSMC is positioning itself at the center of this explosive growth with continued investment in advanced technologies like its 3nm and 5nm fabrication processes, which are increasingly used in AI and high-performance computing (HPC) applications. The company also expects full utilization of its CoWoS (Chip-on-Wafer-on-Substrate) packaging capacity in 2025—critical for stacking high-performance chips efficiently.
“CoWoS will remain in high demand into 2026,” said Wei. “Our customers in the AI and HPC segments are increasing orders, and our entire production capacity is already booked.”
TSMC’s Global Expansion Comes with Cost Pressures
TSMC’s global manufacturing strategy, including the opening of fabs in Arizona, USA, and Kumamoto, Japan, has introduced higher production costs. According to CFO Wendell Huang, these facilities have contributed to a slight reduction in gross margins, projected to fall between 57% and 59% in Q2 2025, down about 0.8 percentage points from Q1.
However, executives emphasized that these investments are strategic long-term moves to diversify risk and meet growing demand in key markets.
Trump’s Tariff Gambit: Short-Term Pressure, Long-Term Uncertainty
President Trump’s renewed trade offensive aims to rebalance the U.S. trade deficit through “reciprocal” tariffs, singling out Taiwan with a 32% duty. After heavy lobbying by industries reliant on semiconductors, the White House implemented a 90-day pause, temporarily reducing the tariff to 10% for all countries except China.
In addition, the U.S. administration has launched “National Security Tariff Investigations” into the entire semiconductor supply chain, signaling that future regulatory pressures could be more extensive and unpredictable.
While these developments raise red flags, industry analysts suggest that TSMC’s unique technological capabilities make it less vulnerable to sudden supply chain shifts.
“There’s no real substitute for TSMC’s bleeding-edge fabrication technology,” said Raymond Cho, a tech policy analyst in Taipei. “Tariffs may hurt margins, but they won’t dislodge customer loyalty overnight.”
Record Q1 Performance Provides Momentum
TSMC reported a record net profit of NT$361.56 billion (US$11.11 billion) in Q1 2025, a 60.4% increase year-on-year, although it dipped 3.5% compared to Q4 2024 due to seasonal slowdowns. The company forecasts Q2 revenue to reach between US$28.4 billion and US$29.2 billion, up approximately 13% from Q1, driven by demand for its advanced chip processes.
“Our 3nm technology has moved into high-volume production and is playing a key role in this revenue upswing,” Huang added.
What This Means for Taiwan’s Economy
TSMC’s performance is closely linked to Taiwan’s broader economic health, especially as the country navigates geopolitical tensions and shifting trade alliances. The company’s resilience offers a stabilizing force amid global instability, bolstering Taiwan’s position as a critical hub in the global tech ecosystem.
Despite Trump’s tariffs and uncertainty over future U.S. policy, Taiwan’s chip industry—led by TSMC—remains indispensable due to its innovation, scale, and integration into cutting-edge applications like AI, 5G, and autonomous systems.
✅ Key Takeaways
- TSMC expects 24–26% sales growth in 2025, driven by AI and advanced chip demand.
- The company remains resilient despite Trump-era tariffs targeting Taiwan.
- Global fabs in Japan and the U.S. are operational but contribute to cost pressure.
- AI chip packaging (CoWoS) demand will fully utilize 2025 production.
- Q1 net profit surged 60.4% YoY; Q2 revenue forecasted to grow 13% from Q1.
📌 FAQs
Why did TSMC keep its 2025 forecast unchanged despite U.S. tariffs?
TSMC’s clients have shown no intention of changing their contracts or production schedules, largely due to strong global demand for AI chips. This demand is expected to outweigh the tariff-related risks.
What are CoWoS and why is it important?
CoWoS (Chip-on-Wafer-on-Substrate) is an advanced 3D packaging technology critical for high-performance chips used in AI and HPC. TSMC is seeing massive demand and expects its entire capacity to be utilized in 2025.
How will Trump’s tariffs impact Taiwan’s semiconductor industry?
Short-term, they may impact profit margins and increase costs. Long-term impact depends on how tariffs evolve and whether clients diversify away from Taiwan. However, TSMC’s unmatched technology makes it hard to replace.
What’s driving TSMC’s growth in 2025?
Key drivers include the rise of AI applications, the expansion of its 3nm and 5nm chip production, and global investment in high-performance computing systems.
What are the risks to TSMC’s outlook?
Major risks include future escalations in trade policy, changes in U.S. national security regulations, supply chain disruptions, or a global tech demand slowdown.
