tsmc's strategic playbook: insights from former general counsel

2025-04-28 tsmc

taipei, Monday, 28 April 2025.
An exclusive interview with TSMC’s former general counsel, Dr. Richard L. Thurston, reveals the strategic logic behind the foundry giant’s moves. Amidst rumors of joint ventures, especially with Intel, Thurston emphasizes TSMC’s preference for maintaining control through acquisitions, as seen in their past consideration of acquiring IBM’s Microelectronics Division. The discussion further explores how to assess industry rumors, highlighting TSMC’s competitive advantage through neutrality and its avoidance of joint ventures, particularly with competitors. The company’s Q1 2025 results show a revenue increase of 42%.

assessing industry rumors

Thurston offers a framework for evaluating industry rumors, advising a structured due diligence approach akin to early-stage deal vetting [1]. Key factors include verifying source credibility, understanding market context, assessing strategic fit, and scrutinizing regulatory filings [1]. He cautions against rumors stemming from anonymous sources or those lacking strategic rationale, and emphasizes the need to consider potential gains and risks associated with any proposed deal [1]. This rigorous approach is crucial for investors navigating the complex semiconductor landscape and assessing the potential impact on TSMC’s stock (TSM:NYSE) [1][3].

manufacturing capacity and geopolitical risks

TSMC is grappling with workforce constraints as it expands its global manufacturing footprint, building 24 new fabrication plants [4]. This expansion occurs against a backdrop of increasing geopolitical tensions, with Samsung warning the U.S. Department of Commerce about potential unintended consequences from sanctions on China’s advanced technology sector [4]. The U.S. BIS and Taiwan’s Ministry of Economic Affairs are closely monitoring TSMC’s operations, highlighting the regulatory scrutiny and geopolitical risks the company faces [1]. These factors could influence TSMC’s production capabilities and stock performance.

arizona expansion and pricing strategy

TSMC’s Arizona facility is becoming a focal point, with plans to relocate approximately 30% of its 2nm and below production capacity there [7]. This move aims to create a self-sufficient, leading-edge manufacturing cluster in the U.S., catering to AI and high-performance computing demands [7]. However, TSMC is charging a 30% premium at its Arizona plant due to capacity constraints, with customers like Apple, Nvidia, and AMD reportedly accepting the increase to secure local supply and mitigate trade-related disruptions [7]. Despite accumulated losses of over NT$39.4 billion (approximately US$1.2 billion) from its Arizona operations over the past four years, TSMC anticipates the facility could break even in 2025 [4].

market leadership and technological advancements

TSMC continues to demonstrate market leadership through technological advancements. The company unveiled a suite of technologies complementing its 1.8nm (18A) process at its 2025 North America Technology Symposium [4]. TSMC’s next-generation A14 process node is slated for production in 2028 [4]. TSMC beat market expectations in Q1 2025, driven by high demand for AI chips, full capacity utilization at its advanced 3nm and 5nm nodes, and effective cost management [4]. For the three months ended March 31, 2025, revenues increased 42% to NT$839.25 billion and net income increased 60% to NT$361.56 billion [3]. This positions TSMC favorably in the competitive semiconductor market [3][4].

Bronnen

TSMC Strategy Foundry Market