tsmc's stock gets a boost: tariff relief improves outlook
taipei, Tuesday, 26 August 2025.
Taiwan Semiconductor Manufacturing’s (TSMC) financial future looks brighter. A tariff exemption is significantly impacting its stock valuation. The exemption is improving its price-to-earnings ratio. Investors are reacting positively, with the stock already up 25.3% over the last year. This surge is contributing to substantial returns over three and five years. As a critical player in the semiconductor industry, tsmc’s stability is vital. The tariff decision is seen as a key element bolstering tsmc’s growth and financial health.
Manufacturing capacity and expansion
TSMC’s manufacturing capacity is expanding in the United States. The company is investing $165 billion in Arizona to construct three wafer fabrication plants [5]. The first fab is already in production. The remaining two are slated for completion by 2030 [5]. This expansion aims to bolster the U.S. semiconductor industry and generate new employment opportunities [5]. TSMC’s CEO, C.C. Wei, has stated that this investment demonstrates the company’s dedication to supporting the U.S. semiconductor sector [5].
Geopolitical risks and tariff threats
Geopolitical tensions continue to cast a shadow over TSMC. Former U.S. President Trump previously threatened to impose tariffs as high as 100% on TSMC if it did not establish manufacturing facilities in the United States [2][4]. Trump also criticized the Biden administration’s subsidies to TSMC, arguing that the company did not require the financial assistance [2]. Concerns persist regarding potential actions against TSMC if China were to retake Taiwan [5]. Some reports even suggested the U.S. might consider destroying TSMC in such a scenario [5].
Taiwan’s economic concerns
TSMC’s increased investment in the U.S. has sparked worries in Taiwan. A spokesperson for the Taiwan Affairs Office, Zhu Fenglian, stated that TSMC’s increased investment in the U.S. could negatively impact Taiwan’s economy [4]. The spokesperson suggested this shift could weaken Taiwan’s economic development and autonomy [4]. Concerns have been raised about the Democratic Progressive Party’s (DPP) approach to U.S.-Taiwan relations, with accusations of prioritizing U.S. interests over Taiwan’s economic well-being [4]. These concerns highlight the delicate balance TSMC must navigate amid geopolitical pressures and economic considerations.
Market leadership and competition
TSMC’s market leadership remains strong, though competition is intensifying. Recent discussions suggest Japan may have acquired TSMC’s 2-nanometer technology [5]. TSMC’s advancements are crucial for maintaining its competitive edge [GPT]. The company’s ability to navigate geopolitical challenges and expand its manufacturing footprint will be vital for sustaining its position as a dominant player in the global semiconductor market [1]. As of August 2025, the political landscape in Taiwan is being closely watched, with potential shifts that could influence TSMC’s operational environment [7].