Key Highlights
- Trump’s second-term policies could impact TSMC’s business outlook.
- TSMC plans a US$100 billion expansion in Arizona, increasing its total U.S. investment to US$165 billion.
- TSMC’s first Arizona fab has begun 4nm production, while the second fab (3nm, 2nm, A16) is under construction for 2028 production.
- Third Arizona fab expected to begin 2nm or advanced production by 2030.
- Higher operating costs in the U.S. raise concerns about TSMC’s profit margins.
- Foreign investors sold NT$209.7 billion worth of TSMC shares, impacting Taiwan’s stock market.
- Taiex index fell 3.59% YTD, with TSMC stock down 9.58%.
- China’s DeepSeek AI startup raises concerns about AI investments.
- Geopolitical tensions & AI developments remain key factors affecting TSMC’s future.
- Taiwan’s IC exports hit US$165 billion in 2024, accounting for 35% of total exports.
Introduction
Taiwan Semiconductor Manufacturing Co. (TSMC) faces economic and geopolitical uncertainties as Donald Trump’s second-term policies take shape. With a US$100 billion expansion in Arizona, analysts warn that higher operational costs & shifting investor sentiment could impact TSMC’s profitability & Taiwan’s broader economy.
TSMC’s Arizona Expansion & Trump’s Impact
1. Massive U.S. Investment
- US$100 billion investment adds to TSMC’s existing US$65 billion commitment in Arizona.
- Expansion includes three wafer fabs, two IC packaging plants, and an R&D center.
- Move aims to reduce tariff risks under Trump’s trade policies.
2. Production Timeline & Cost Concerns
- First Arizona fab (4nm) is operational.
- Second fab (3nm, 2nm, A16) to launch in 2028.
- Third fab (2nm or more advanced) set for 2030 production.
- Higher labor & operational costs in the U.S. may affect profit margins.
3. Stock Market & Investor Reactions
- Foreign investors reassessed TSMC’s valuation, leading to a massive stock sell-off.
- Foreign institutional investors dumped NT$209.7 billion worth of TSMC shares.
- Taiex index dropped 3.59% YTD, with TSMC stock down 9.58%.
Geopolitical & AI Market Challenges
1. Geopolitical Tensions & Supply Chain Reshaping
- Trump’s policies & China-U.S. tensions could reshape the semiconductor supply chain.
- TSMC might face additional restrictions or tariffs.
2. AI Competition from China
- DeepSeek AI, a Chinese AI startup, raises concerns about future AI investments.
- Could reduce TSMC’s AI chip orders and shift demand toward China-based fabs.
3. Taiwan’s Semiconductor Dominance
- Taiwan’s IC exports grew to US$165 billion in 2024 (35% of total exports).
- Despite challenges, TSMC remains the largest pure-play wafer foundry globally.
FAQs
How will Trump’s policies impact TSMC?
Trump’s policies may increase economic uncertainties, reshape supply chains, and affect TSMC’s U.S. operations, particularly tariff policies & trade restrictions.
Why is TSMC investing US$100 billion in Arizona?
TSMC aims to reduce tariff risks, expand global reach, and meet U.S. demand for advanced semiconductor production.
How are investors reacting to TSMC’s expansion?
Foreign institutional investors have sold large amounts of TSMC shares, causing a decline in Taiwan’s stock market and affecting the NT$ exchange rate.
What are the risks of TSMC’s U.S. expansion?
Higher operational costs in the U.S.
Potential regulatory changes under Trump.
Shifting investor confidence in semiconductor investments.
Can TSMC maintain its market dominance?
Despite challenges from AI competition & geopolitics, TSMC is expected to maintain its leadership in the 2nm & advanced semiconductor space.
