The world's largest foundry, Taiwan Semiconductor Manufacturing Company (TSMC), is increasing its investment in the United States to a total of $265 billion (approximately 393 trillion won) in response to anticipated strong demand for artificial intelligence (AI) chips over the coming years. This significant expansion aims to address rising orders from U.S. customers and to fend off competition.
On July 20, Reuters and Bloomberg reported that TSMC has decided to add $100 billion (about 148 trillion won) to its existing U.S. investment plans.
Wendell Huang, TSMC's Chief Financial Officer, stated, "We expect strong demand from our customers to continue for several years to come."
If the investment proceeds as planned, Arizona will eventually host 10 semiconductor manufacturing plants, two advanced packaging facilities, and one research and development center. The first plant is already operational, while the second will soon begin receiving production equipment. The third plant is under construction, and preliminary work has started on the fourth plant and the first advanced packaging facility.
The primary driver behind this large-scale expansion is the demand for AI chips. North American customers, including NVIDIA and AMD, accounted for 78% of TSMC's total revenue last quarter. TSMC anticipates that AI chip demand will exceed its production capacity for the foreseeable future, prompting an increase in capital investment to at least $60 billion (approximately 89 trillion won) this year.
Competition is also intensifying. Intel, backed by the U.S. government, is ramping up its efforts in the advanced semiconductor foundry market, while Elon Musk is pursuing his own semiconductor production business. Huang expressed confidence in TSMC's competitiveness, saying, "Our competitors are excellent, but we are better."
However, there are practical constraints to the expansion in the U.S. Arizona faces a shortage of construction labor and infrastructure, which limits the speed of factory construction. Huang noted, "We will work with the U.S. government to address these issues."
While expanding its investments in the U.S., TSMC maintains its principle of first mass-producing the latest semiconductor technologies in Taiwan. The company plans to consider relocating production to overseas plants only after stable production is established in Taiwan. TSMC also plans to build an additional 13 advanced semiconductor and packaging plants in Taiwan over the next few years.
Market analysts have raised concerns about the aggressive expansion of investments. Despite reporting record earnings, TSMC's stock fell 7.3% on July 17. GF Securities in China suggested that TSMC's delayed response to the rising demand for AI chips may have resulted in some orders shifting to competitors, leading to a downgrade in their investment outlook.
* This article has been translated by AI.
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