Key Highlights
- Taiwan Semiconductor’s CEO C.C. Wei informed investors that production capacity will remain insufficient to satisfy AI chip demand for an extended period, despite US facility expansion.
- The chipmaker maintained its annual revenue growth projection exceeding 30%.
- TSMC envisions constructing at least four more US manufacturing facilities beyond the six currently planned, necessitating approximately $100 billion in additional investment.
- The CEO confirmed acquisition of ASML’s High-NA EUV lithography systems but stated commercial deployment awaits economic feasibility.
- TSM stock declined 1.7% in Taipei trading following Broadcom’s underwhelming forecast.
Taiwan Semiconductor Manufacturing (TSM) stock experienced a 1.7% decline in Taipei trading on Thursday following CEO C.C. Wei’s announcement that the company’s production capacity will remain inadequate to satisfy AI-fueled chip demand for an extended timeframe — despite aggressive expansion of US manufacturing operations.
Taiwan Semiconductor Manufacturing Company Limited, TSM
“Meeting customer demand will require considerable time,” Wei stated during TSMC’s annual shareholder gathering in Hsinchu, Taiwan.
Despite the near-term challenges, TSM shares have surged more than fourfold during the past three years, propelled by extraordinary expansion in its primary business of providing chips to companies including Nvidia and AMD.
Wei reaffirmed TSMC’s projection for annual revenue expansion surpassing 30%. The semiconductor giant elevated this guidance in April, simultaneously indicating capital expenditures would likely gravitate toward the higher end of a bracket extending to $56 billion.
The demand pressure originates from industry leaders. Major cloud computing providers are projected to allocate a collective $725 billion toward AI infrastructure during the current year, with TSMC serving as the principal supplier for cutting-edge chips driving substantial portions of this deployment.
Regardless of supply limitations, Wei emphasized TSMC will avoid implementing aggressive price escalations. The objective, he explained, is maintaining business consistency and reliability for clients.
United States Manufacturing Expansion Takes Form
Under a US-Taiwan commercial arrangement, TSMC plans to establish a minimum of four additional semiconductor production facilities in America, supplementing six plants already under development. This expansion introduces approximately $100 billion in fresh capital obligations, beyond the $165 billion previously allocated.
Wei noted that two Arizona land parcels TSMC has secured should adequately accommodate its US expansion requirements for the coming decade.
The American expansion partially responds to client demands. Nvidia, Broadcom, and competing firms are vying for capacity at TSMC’s most sophisticated manufacturing nodes, while geographical distribution mitigates political and supply chain vulnerabilities.
TSMC personnel will share in the prosperity. Wei announced employees will receive average bonus enhancements exceeding 30% this year, as expectations grow for AI industry leaders to share greater portions of their profits.
Advanced Manufacturing Equipment Already Secured
Wei responded to investor questions regarding TSMC’s standing in next-generation semiconductor manufacturing capabilities, particularly concerning ASML’s High-NA EUV lithography systems.
These advanced machines, capable of creating smaller and more densely packed transistor patterns than existing equipment, carry price tags reaching $400 million per unit. Intel has already implemented the technology. TSMC has not yet utilized it for commercial-scale production.
Wei verified TSMC has acquired the equipment and is performing research and development activities with it. The delay concerns financial viability, not technical capability. TSMC will only integrate the machines into production operations once utilizing them becomes economically sustainable at volume.
“We have secured this equipment, and our engineering teams are vigorously pursuing associated research and development initiatives. It simply hasn’t been implemented for large-scale commercial production,” Wei explained.
He refused to disclose the quantity of units TSMC has purchased.
The statements echo comparable comments from TSMC executive Kevin Zhang in April, when he characterized the new systems as “very expensive” and indicated existing objectives remain attainable using standard EUV equipment. Those remarks temporarily pressured ASML stock downward.
Wei informed shareholders Thursday that TSMC’s present priority centers on optimizing current chipmaking equipment efficiency to decrease production expenses.
