TSMC: Billions in investments between tariff concerns and future plans

TSMC: Billions in investments between tariff concerns and future plans

The world's largest chip manufacturer TSMC (Taiwan Semiconductor Manufacturing Company) is facing significant challenges and investments that could have a lasting impact on the industry. In the first quarter of 2025, the company reported an impressive net profit of around 10.5 billion euros and sales of 24.4 billion euros. In light of these financial successes, the board also declared a dividend of NT$5.00 per share. To remain competitive in the long term, TSMC plans to make $15.25 billion in capital investments focused on expanding advanced manufacturing technologies, expanding packaging capabilities and building new semiconductor factories.

However, these expansion plans face significant risks. The possible imposition of 10% US tariffs on semiconductor production equipment could pose challenges for TSMC. According to recent reports, the group could see additional costs of $6.4 billion on the $100 billion in factory investments already planned in the United States. These developments could delay TSMC's expansion plans in the US, particularly in Arizona with two new factories and 21,000 jobs planned, and exacerbate overall higher costs compared to Asian locations.

Consequences of the tariff debate

The effects of the tariff debate should not be underestimated. Analysts are reporting signs of a slowdown in semiconductor sales, possibly driven by stockpiling ahead of President Donald Trump's announced tariffs on international goods that could also affect semiconductors from Taiwan. Such uncertainty could threaten the growth of the entire U.S. chip industry and further complicate market conditions for TSMC.

Additionally, market forecasts signal that TSMC could increase prices for its most advanced semiconductor wafers by up to 15 percent. These price increases are due to rising production costs and the threat of impending US tariffs. Analysts had previously only expected an increase of 5 to 10 percent by 2025, which makes the new forecasts appear all the more serious. The tariff measures could therefore accelerate the already existing cost increases, which affects both TSMC and its customers.

Price developments and market position

TSMC is expected to increase prices for smaller nodes starting at 7nm, with the price of a 7nm wafer currently hovering around $10,000. For more advanced technologies, such as the 3nm wafer, Apple currently pays $18,000. Future tariffs could even raise prices to an estimated $20,000 to $23,000. This development would not only increase production costs, but also device prices, which could result in more expensive devices with fewer performance improvements.

By the way, the latest iPhone chips do not show significant performance improvements compared to their previous models, which could be due to the more expensive semiconductor costs. Nvidia's RTX 50 series is considered one of the most disappointing generations of graphics cards, with the cost of the same nodes as before (RTX 40) resulting in moderate performance.

Nevertheless, TSMC continues to position itself as the undisputed market leader with a market capitalization of $915 billion and holds a place among the world's ten most valuable companies. The company aims to take control of half of a $1 trillion market by 2030, driven by innovative advances and technologies. Despite the challenges, TSMC remains optimistic, with an expansion in Arizona and a goal of starting 4nm chip manufacturing this year.

Finally, it remains to be seen how the collective bargaining policy and the associated challenges will affect the company's growth ambitions. Time will tell whether TSMC is able to navigate the uncertainties while maintaining its position as a leader in the semiconductor industry.