TSMC's Global Gamble: Navigating Tariffs and Expansion

Taiwan's Semiconductor Giant Faces Uncertainties at Investor Conference

Taipei, April 14 – Investors are poised to closely scrutinize Taiwan Semiconductor Manufacturing Co.'s (TSMC) strategic moves at its upcoming investor conference, focusing on its ambitious global expansion plans and the potential fallout from evolving U.S. tariff policies.

Amid global economic uncertainties triggered by recent U.S. tariff actions, the semiconductor industry's outlook is under intense review. Liu Pei-chen (劉佩真), a researcher at the Taiwan Industry Economics Database under the Taiwan Institute of Economic Research, highlighted the critical need to monitor end-user demand worldwide, as any weakening could significantly impact the sector.

Liu pointed out that TSMC's significant investment of an additional US$100 billion to construct two new wafer fabs, two IC assembly plants, and a research and development center in Arizona is a strategic response to potentially avoid the impact of tariffs on semiconductors.

These substantial global expansion efforts, especially the progress in Arizona, will be a central theme at Thursday's investor conference.

While artificial intelligence is predicted to stimulate demand for new PCs and smartphones, potentially driving up semiconductor demand, the impact of current tariff uncertainties remains a key concern, according to Liu.

Following volatile shifts in U.S. tariff policies, Washington initially exempted electronic imports, including computers, phones, and semiconductors, from "reciprocal" tariffs. However, U.S. Commerce Secretary Howard Lutnick subsequently clarified that this exemption was "not permanent."

Furthermore, U.S. President Donald Trump announced a review of semiconductors and the entire electronics supply chain as part of upcoming National Security Tariff Investigations.

This environment of uncertainty raises concerns that TSMC's U.S. investments could strain its finances and impact expansion in Taiwan, Japan, and Germany, Liu suggested.

Investors will be keenly interested in TSMC's capital expenditure plans, its overall expansion strategy, and the potential impact of its aggressive global expansion on its gross margin, Liu stated.

A key area of focus will be TSMC's reported joint chip-making venture with U.S.-based Intel Corp., which could grant TSMC, the world's largest contract chip maker, a stake in the new company. However, concerns linger regarding the potential for leaks of TSMC's proprietary business information.

At its previous investor conference on January 16th, TSMC projected a sales growth of 24-26 percent in U.S. dollar terms for 2025.

Recent reports indicate that TSMC is set to break ground on its third wafer fab in Arizona in early June, accelerating construction plans for a chip assembly plant as part of its new US$100 billion investment proposal announced in March.

This new investment will bring TSMC's total investment in Arizona to an impressive US$165 billion.