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Globe and Mail
2 days ago
- Business
- Globe and Mail
Taiwan Semiconductor Just Threw Cold Water on Tariff Concerns
Key Points Taiwan Semiconductor's products remain in high demand among end users. TSMC is building plants in the U.S. to avoid tariffs. 10 stocks we like better than Taiwan Semiconductor Manufacturing › Tariff effects are still front and center in many investors' minds. As we approach Aug. 1, the date when many reciprocal tariffs take effect, the entire economic landscape could shift. Although deals are being announced, many questions remain regarding their impact. However, there is one company that stands out by saying it hasn't seen any effect: Taiwan Semiconductor (NYSE: TSM). Taiwan Semiconductor's CEO C.C. Wei stated on its Q2 conference call that they "have not seen any change in our customers' behavior so far" regarding tariffs. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » This is a significant development for TSMC, but does it suggest that the rest of the market is overreacting to tariffs? Semiconductors aren't subject to reciprocal tariffs There are a few key points to understand regarding tariffs and semiconductors. First, semiconductors are currently exempt from all reciprocal tariffs. Additionally, they're excluded from the base 10% blanket tariff. However, that could shift as the Aug. 1 reciprocal tariff date arrives. If those tariffs are implemented, other goods could be subject to higher tariff rates than semiconductors. This means investors need to be cautious about drawing conclusions about how tariffs are being applied to one industry versus another. Still, it shows that the end users of products with their chips in them aren't slowing down purchases. A second critical factor is Taiwan Semiconductor's unique position within the chip industry. There aren't many choices when it comes to chip foundries with high-end technology. Intel (NASDAQ: INTC) has failed to launch many of the cutting-edge chip nodes, and low chip yields have plagued Samsung. This leaves TSMC at the top of the high-end semiconductor fabrication pyramid, making it a critical partner for tech giants like Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL). As a result, these companies are somewhat compelled to deal with the tariffs rather than seeking an alternative. But this is only temporary. TSMC is working to avoid tariffs by accelerating the build-out of its U.S. chip production facilities in Arizona. This will allow U.S. clients to avoid any tariffs on foreign goods. While Taiwan Semiconductor may not be experiencing any effects from tariffs, investors need to be cautious about drawing conclusions from its experience to the broader market. It's in a unique position that essentially requires its clients to deal with any tariff levies that come up, but it's actively working on increasing U.S. chip production capabilities to sidestep any tariffs. With TSMC's strong position, the company also becomes an intriguing stock to consider, as few companies hold a more powerful position than TSMC. Taiwan Semiconductor looks like an excellent buy at these prices Taiwan Semiconductor's bull case is fairly straightforward: Its clients will use more chips and increasingly advanced chips over the next few years. This seems like a no-brainer investment thesis, and management's bold five-year growth projections back it up. Starting with 2025, management projects that AI-related revenue will grow at a 45% compound annual growth rate (CAGR) over the next five years, with total revenue increasing at nearly a 20% CAGR. That's easily market-beating growth, yet Taiwan Semiconductor's stock trades at nearly a market-average forward price-to-earnings (P/E) ratio. TSM PE Ratio (Forward) data by YCharts Taiwan Semiconductor's 24 times forward earnings is nearly identical to the S&P 500 's (SNPINDEX: ^GSPC) 23.8 times forward earnings. However, with market-beating growth expected, this makes the price well worth paying, and I think Taiwan Semiconductor's stock looks like a great buy right now due to its projected growth, reasonable price, and strong position in the chip fabrication industry. Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now? Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. *Stock Advisor returns as of July 21, 2025
Phone Arena
21-07-2025
- Business
- Phone Arena
TSMC rushes to finish its US fabs quarters ahead of schedule
As you probably know, TSMC, the largest chip foundry, has said that it will spend $165 billion to build fabs in the U.S. that can produce advanced chips. After reporting its second quarter earnings last week, TSMC held a conference call during which it updated its plans for global manufacturing. In Arizona, the company will put up six advanced wafer manufacturing fabrication facilities, two advanced packaging fabrication facilities, and a center for research & development. TSMC CEO C.C. Wei says that the first fab in Arizona is complete and is up and running. The second fab has been built, and work has started on the third. The executive also said that TSMC is seeing "strong interest" from its U.S. customers, leading the foundry to speed up its volume production schedule by cutting quarters off of its production schedule. He also said during the call, "TSMC will continue to play a critical and integral role in enabling our customers' success, while also maintaining a key partner and network of the U.S. semiconductor industry." TSMC's long-term stockholders have had a great ride. | Image credit-Google With President Donald Trump threatening to impose 25% tariffs on imported semiconductors. Most likely, the tariffs will be imposed on devices shipped into the U.S. that contain foreign-manufactured chips. For example, Apple will have to pay the import tax on an iPhone imported into the U.S. from China or India. Apple will also be charged for the semiconductor tariffs unless it uses chips manufactured in the U.S. The U.S. fab in Arizona that started making 4nm chips last year (Fab 21 Phase 1) will continue to do so this year. What is very impressive is that TSMC's yield for production using the 4nm process node matches its yield in Taiwan. Apple chips that could come of the assembly line in Arizona include: A16 Bionic -Used to power the iPhone 14 Pro and iPhone 14 Pro Max, the iPhone 15 and iPhone 15 Plus. Reports indicate that TSMC has begun trial and small-scale manufacturing of 4nm chips and is now ramping up mass production for these chips. Trial and small scale production has begun and production is ramping up for this chip. S9 SiP (System in Package) -This chip is currently used in the Apple Watch Ultra 2. Later this year, it could be found inside new Home Pod mini models later this year. TSMC has completed its second fab in Arizona (Fab 21 Phase 2). This is where TSMC is rushing to start production of 3nm chips several quarters early due to strong customer demand in the U.S. Some ramping up of 3nm production in the U.S. could start in late 2025 , early 2026 ahead of schedule. -C.C. Wei, TSMC, CEO This past April, TSMC broke ground on its third fab in Arizona (Fab 21 Phase 2). This fab will produce 2nm and A16 (essentially equivalent to 1.6nm) chips. s The first smartphones to sport a 2nm application processor will be released later this year or early in 2026. These chips will be produced in Taiwan as U.S. built 2nm and A16 chips won't be built in the U.S. until the end of the current decade. During the second quarter of 2025, TSMC generated 933.80 billion new Taiwan dollars ($31.7 billion USD) in revenue. Net income, reported at 398.27 billion new Taiwan dollars ($13.5 billion USD), was $20.41 billion new Taiwan dollars ($692.6 million USD). Not only was Q2 net ahead of expectations, it was up 61% year-over-year. In other words, it was another strong quarterly report for TSMC. For the first time in history, last week TSMC's market value closed above $1 trillion. In pre-market trading on the Robinhood trading platform, TSMC's shares were trading at $240.50, up 4.2% or 10 cents a share. The 52-week high of $248.28 is within reach. With a 52-week low of $133.57, the stock is up $19.3% for 2025.
Yahoo
19-07-2025
- Business
- Yahoo
TSMC's Q2 revenue tops $30B, beats expectations
This story was originally published on Manufacturing Dive. To receive daily news and insights, subscribe to our free daily Manufacturing Dive newsletter. Dive Brief: Taiwan Semiconductor Manufacturing Co. saw its second quarter earnings increase, with revenue up 44.4% year over year to an estimated $30.1 billion, the chipmaker announced Thursday. The Q2 revenue boost was due to the 'continued robust' demand for artificial intelligence and high-performance computing-related products, Wendell Huang, SVP and CFO, said in a statement. Looking ahead, TSMC expects revenue to be between $31.8 billion and $33 billion in Q3, driven by strong demand for its chip processing technologies, Huang added. The company also forecast overall 2025 revenue to be up nearly 30%. Dive Insight: Chairman and CEO C.C. Wei provided more details of the company's manufacturing plans in the United States on the earnings call on Thursday. In March, TSMC announced plans to invest an additional $100 billion in the U.S., bringing its total investment to $165 billion. The expansion includes plans for six advanced wafer manufacturing fabs in Arizona. Its fourth facility will use N2 and A16 process technology, and its fifth and sixth facilities will use 'even more advanced technology,' Wei said. 'The construction and ramp schedule for those fabs will be based on our customers' needs,' Wei said. 'Our expansion plan will enable TSMC to scale up to a gigafab cluster in Arizona to support the needs of our leading-edge customers in smartphone, AI and HPC applications.' The investment will also be used to build two advanced packaging facilities and establish a research and development center in Arizona to complete TSMC's AI supply chain, supporting 'strong multiyear demand' from TSMC customers, Wei added. TSMC's first Arizona fab began high-volume production in the last quarter of 2024, using N4 process technology. Construction of its second fab, which will utilize 3-nanometer process technology, is complete. Whereas the construction of its third fabrication facility, which will use 2-nanometer and 16 process technologies, has begun. Once construction is completed, around 30% of TSMC's 2-nanometer and 'more advanced capacity' will be located in Arizona and create a semiconductor manufacturing cluster in the U.S., Wei said. TSMC's Q2 exceeded leadership's expectations. It was previously anticipated to generate revenue between $28.4 billion and $29.2 billion. Despite the revenue hike and positive forecast, the fluctuating foreign exchange rate between the U.S. and the Taiwan dollar could have a 'sizable' impact on the chipmaker's reported revenue and gross profit margin, Huang said on the earnings call. While nearly all of its revenue is in U.S. dollars, about 75% of TSMC's cost of goods is sold in Taiwan dollars. The company also experienced a financial impact of more than 100 basis points from ramping its overseas fabs, mainly due to margin dilution as TSMC's Arizona and Japan fabs started to ramp up, he added. 'Despite the higher cost of overseas fabs, we will leverage our increasing size in Arizona and work on our operations to improve the cost structure,' Huang said. 'We will also continue to work closely with our customers and suppliers to manage the impact.' TSMC has six factors to determine its profitability: leadership technology development and ramp-up, pricing, capacity utilization, cost reduction, technology mix and foreign exchange. The latter of which is out of the company's control, Huang added. 'When the foreign exchange rate is unfavorable as it is currently, we will focus on the fundamentals of our business and lean on the other five factors to manage through it, and we have successfully done in the past,' Huang said. 'Thus, even with the unfavorable foreign exchange rate, we believe a long-term gross margin of 53% and higher remains well achievable.' Going into the second half of the year, TSMC has not seen any changes in its customers' behavior so far, Wei said on the call. Nevertheless, the chipmaker acknowledges the uncertainties and risks associated with the potential impact of tariff policies, particularly on consumer-related and price-sensitive end-market segments. Still, the company believes that this is 'short-term in nature' and continues to anticipate a mild recovery in the non-AI end market in 2025, Wei added. Recommended Reading TSMC, unbothered by tariffs, holds 2025 outlook Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
18-07-2025
- Business
- Globe and Mail
TSMC posts 60% jump in record quarterly profit, but wary of U.S. tariffs
Taiwan Semiconductor Manufacturing Company TSM-N, the world's main producer of advanced AI chips, posted record, forecast-beating quarterly profit on Thursday but warned that future income might be hit by U.S. tariffs, though perhaps not until the fourth quarter. Saying demand for artificial intelligence was getting stronger and stronger, TSMC predicted another leap in sales for the third quarter and hiked its revenue outlook for the full year. It also noted that key client Nvidia NVDA-Q had recently been allowed by the U.S. government to resume sales to China of its H20 AI chip. 'China is a big market, and my customer can continue to supply the chip to the big market, and it's very positive news for them and in return it's very positive news for TSMC,' Chief Executive C.C. Wei told a press conference. But momentum for fourth-quarter earnings could be different. 'We are taking into consideration the possible impact of tariffs and a lot of other uncertainties, so we are becoming more conservative,' he said, though he added that TSMC had yet to see any changes in customer behavior so far. In April-June, net profit hit a historic high of T$398.3-billion ($18.6 billion), up 60.7 per cent year-on-year and marking its fifth straight quarter of double-digit growth. That was well ahead of a T$377.9-billion LSEG SmartEstimate. For the current quarter, it predicted a leap in revenue of up to 40 per cent and for the full year, it now estimates revenue growth of around 30 per cent in U.S. dollar terms, up from a previous forecast of 'close to the mid-20s.' But while sales are roaring, TSMC said the Taiwan dollar's appreciation against the U.S. dollar - around 12 per cent so far this year - would dent margins. Its third-quarter gross margin is expected to fall to between 55.5 per cent and 57.5 per cent, down from 58.6 per cent in the second quarter, also hurt by TSMC's ramp-up of investment in new U.S. and Japanese factories. However, the company stuck to its capital expenditure plan for the year of $38-billion to $42-billion, and Chief Financial Officer Wendell Huang said it was very unlikely such spending would suddenly drop going forward. TSMC announced plans for a $100-billion U.S. investment with U.S. President Donald Trump at the White House in March, on top of $65 billion pledged for three plants in the state of Arizona, one of which is up and running. But Trump has said semiconductor-specific tariffs could come soon. Taiwan was also threatened with a 32 per cent reciprocal tariff rate in April, although it has yet to be notified of an updated figure that some countries have received. TSMC's second-half earnings could also be affected if sales for Apple AAPL-Q, another major customer, disappoint, said Allen Huang, a vice president at Taiwan's Mega International Securities Investment Services. Apple typically launches new products in the fourth quarter. 'One warning sign is that Apple's sales in China have been soft,' he said, adding that this was likely a factor in TSMC's caution about earnings towards the end of the year. Taiwan-listed shares in TSMC surged some 80 per cent last year but have climbed just five per cent for the year to date on worries about tariffs and unfavorable currency exchange rates.
Time of India
18-07-2025
- Business
- Time of India
TSMC's global expansion: Eyes Arizona as global semiconductor hub; planning to establish a global gigafab cluster
Taiwanese semiconductor giant TSMC is accelerating its US expansion, stepping up the construction of its second and third chip fabrication plants in Arizona as part of plans to build a massive 'gigafab' cluster in the state, as per a report by Focus Taiwan. Taiwan Semiconductor Manufacturing Co. (TSMC) is advancing its strategy to meet increasing global demand for advanced semiconductors used in smartphones, artificial intelligence (AI), and high-performance computing (HPC). At an investor conference on Thursday, TSMC chairman CC Wei highlighted Arizona's growing strategic importance within the company's global operations. He said the state is set to become a critical hub for TSMC's most advanced manufacturing technologies. The company's first Arizona fab began mass production in the fourth quarter of 2024, using 4-nanometre process technology. Wei further stated that the facility's yield rate is already on par with TSMC's similar fabs in Taiwan. Construction of the second Arizona fab, which will produce 3nm chips, the most advanced node currently deployed in Taiwan, has been completed. Due to strong customer demand, production is now scheduled to commence several quarters ahead of the original timeline. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Turn Nervous Into Natural – Book a Free Demo Today Planet Spark Book Now Undo Meanwhile, groundwork has begun for a third fab in the state, which will use 2nm and A16 process technologies. Wei confirmed that demand for AI-related chips remains particularly robust. TSMC's total investment across the three Arizona fabs stands at $65 billion. The company has also pledged an additional $100 billion over the next few years to deepen its US presence. This includes plans for three more fabs, two integrated circuit (IC) assembly plants, and a dedicated research and development centre. These projects are expected to transform Arizona into a self-sustaining semiconductor manufacturing hub, with the state's facilities eventually accounting for roughly 30% of TSMC's most advanced chip production, those using 2nm and newer technologies. TSMC's global expansion plans extend beyond the US. In Japan, its first fab in Kumamoto began mass production in late 2024, producing chips using 12nm, 16nm, and 28nm processes. A second fab, originally scheduled to break ground in early 2025 and begin operations in late 2027, will manufacture 6nm, 7nm, and 40nm chips. However, Wei noted a slight delay in the project due to traffic infrastructure issues. Construction is now expected to start later this year, depending on local progress. In Germany, TSMC is also progressing smoothly with the construction of a fabrication facility in Dresden, which will focus on specialty semiconductor technologies. Back in Taiwan, the company continues its major domestic expansion. It plans to build 11 new wafer fabs and four advanced IC assembly facilities over the coming years. Current projects in Hsinchu and Kaohsiung are scheduled to begin mass production using 2nm process technology later this year. Despite the ambitious overseas expansion, TSMC's chief financial officer Wendell Huang cautioned that the company will face short-term financial pressures. He projected a 2–3 percentage point dip in gross margins initially, with a broader 3–4 percentage point decline expected over the next five years due to the higher operating costs associated with international sites. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
