Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) plan to increase its investments in the US by US$100 billion would provide the company with long-term strategic advantages, researchers said on Wednesday.
Taiwan Ratings Corp (中華信評) said that TSMC’s investment plan — if implemented successfully — would help the company “reduce the risk of its assets being concentrated in Taiwan over the long term.”
Such a strategy would “alleviate geopolitical and trade policy risks,” the ratings agency said in a report, alluding to potential tariffs that many fear Washington could levy against Taiwan’s domestic chip industry.
Photo: Bloomberg
The report said that even if TSMC’s capital expenditure increases to US$50 billion to US$55 billion per year from this year to 2027, the most valuable company on the local stock exchange “should still be able to maintain a net cash position supported by strong profitability and operating cash flow.”
However, according to Taiwan Ratings’ parent company, S&P Global Co, TSMC’s new production capacity in the US would take longer to achieve profitability than if such capacity was built in Taiwan.
US President Donald Trump and TSMC chairman C.C. Wei (魏哲家) on Monday jointly announced that the Taiwanese chip manufacturer would invest the 12-figure sum to build facilities, including three wafer fabs and two advanced packaging plants in the US.
TrendForce Corp (集邦科技) said that even if TSMC’s US$100 billion investment goes smoothly, the planned fabs would “enter mass production after 2030 at the earliest.”
Although TSMC’s production capacity in the US could reach 6 percent by 2035, its production capacity in Taiwan would remain at or above 80 percent, the Taipei-based market researcher said in a separate report.
TrendForce emphasized that TSMC’s latest investment pledge is a continuation of a longer-term trend in the company’s supply chain differentiation strategy.
The Taiwanese chip behemoth accelerated this strategy after 2018 due to factors including “global trade disputes” and the COVID-19 pandemic, which persuaded governments worldwide to seek to build production capacity in semiconductor technologies in local markets, the report said.
However, TSMC’s plan to expand its investment in the US would contribute to a decline in Taiwan’s dominance of the global chip industry over the next five years, the report said.
Taiwan held a 71 percent global market share in the production of advanced processes and 53 percent for mature processes in 2021, but that would drop to 58 percent and 30 percent respectively by 2030, TrendForce said.
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