Recently, Taiwan Semiconductor Manufacturing Company (TSMC) announced an additional $100 billion investment to expand their factory in Arizona, USA. This decision also comes with an increase in the company’s capital expenditure for the year. CFO of the company, Huang Renzhao, emphasized in an interview with CNBC that they will focus on the fundamentals of their business and “do not intend to hand over any opportunities.”
This new commitment brings TSMC’s total investment in Arizona to $265 billion. Not only does it highlight a massive capacity expansion plan driven by AI, but it also led the company to raise its annual capital expenditure forecast to between $60 billion and $64 billion. As a key supplier to Nvidia and a leading manufacturer of advanced AI chips, TSMC’s aggressive capital expenditure and soaring profit margins have become a barometer of global semiconductor industry demand.
In the interview with CNBC reporter Emily Tan, Huang Renzhao stated that the increased investment in the US is based on strong customer demand in the US market and strong support from the US government. He expressed satisfaction with the progress of the Arizona factory, citing robust and long-term structural demand as a reason for significantly increasing the investment scale.
To meet the rapidly growing chip demand from customers, TSMC is actively optimizing its advanced process capacity, including quickly transitioning 5-nanometer capacity to more advanced 3-nanometer to support customers.
Regarding the progress of the US expansion, Huang Renzhao informed CNBC that the first phase of the factory using 4-nanometer technology has begun operations, with the scale expected to increase in the coming quarters. He also positioned the 2-nanometer technology as the latest revenue driver for the company in the third quarter, with initial revenue contributions already seen in the second quarter.
Huang Renzhao admitted that the construction cost of the US wafer fab is four to five times higher than in Taiwan, and while the overseas operation may initially dilute gross margin, this expansion will further promote the development of the US semiconductor ecosystem.
He revealed that the first wafer fab in Arizona has officially commenced production, with yield metrics comparable to Taiwan’s flagship fab. The second fab is about to start equipment installation, the third fab is under construction, and plans are underway for the fourth fab and the first advanced packaging fab in the same complex.
The company plans to build a total of 12 wafer fabs and advanced packaging plants, as well as a research and development center locally. However, Huang Renzhao did not provide a specific timeline for the latest investments.
He emphasized that TSMC will continue to invest in Taiwan. He added that, “When it comes to mass production of cutting-edge technology, close cooperation between research and development and operations departments is critical, and this must be done in Taiwan. It’s only when the technology is stable that we will consider moving it overseas.”
Following the release of TSMC’s latest financial report, the stock price experienced significant fluctuations. The stock price rose by over 1% on Thursday (July 17), dropped by over 7% the following day (July 18), and finally increased by 1.31% on Monday (July 20), reaching NT$2,320 (approximately $72). Although it did not fully recover, the company’s stock has risen by over 40% year to date.
Additionally, TSMC’s net profit in the second quarter surged by 77% to a record NT$706.6 billion (approximately $22 billion), far exceeding market expectations. This marks the company’s ninth consecutive quarter of double-digit growth.
Regarding the stock performance, Huang Renzhao responded that TSMC cannot control the financial markets and “what we can do is focus on our business.” He added that while the semiconductor industry is facing significant pressure from rising component prices, TSMC’s strategic focus on high-end markets has minimized the impact.
When asked by CNBC whether TSMC would consider issuing new shares in the US for fundraising, Huang Renzhao replied that if market conditions are favorable for the company, they will “not rule out issuing new bonds.”
Addressing issues in the Chinese market, Huang Renzhao told CNBC that mainland Chinese customers account for only about 8% of TSMC’s business, and the company will continue to comply with US government export control regulations.
He explained that, “We will comply with all regulations, but when customers resell products to others, we cannot track their final destination, that’s the reality.”
Furthermore, TSMC is shifting its focus towards future growth drivers. Huang Renzhao pointed out that the company’s recent joint venture project with Sony in image sensors supports the strategic commitment to long-term growth for special technology clients when discussing the prospects of Physical AI.