tsmc to tackle growth and tariff impacts at investor meeting
Taipei, Monday, 30 December 2024.
TSMC is gearing up for a critical investor meeting on January 16, 2025, amid speculation about U.S. President-elect Donald Trump’s potential tariff policies. This meeting will be pivotal, as U.S. market conditions significantly influence TSMC’s earnings. Analysts in Taiwan expect TSMC to outperform the local semiconductor industry with a projected 20% growth rate in 2025. The company plans to discuss its optimistic outlook at the meeting. AI demand, especially for Nvidia’s chips, is expected to drive TSMC’s growth. However, potential high tariffs could impact global pricing. TSMC’s expansion efforts, including new facilities in Japan and the U.S., are also under the spotlight. These developments might affect TSMC’s profit margins. The meeting will address these challenges and explore strategies to maintain growth amid changing economic conditions. TSMC aims to reassure investors and outline its path forward in this dynamic landscape.
Market leadership in advanced chip production
TSMC’s dominance in advanced chip manufacturing continues to strengthen, particularly in the AI sector. The company has secured all mass production orders for Qualcomm’s Snapdragon 8 Elite 2 chips for 2025 [5]. Current trial production yields for the 2nm process are reaching 60% [5], while the company’s Arizona facility prepares for mass production early next year [1]. Rising demand for 3nm and 5nm chips in AI applications, along with orders for Nvidia’s B200 and B300 chips, are set to drive TSMC’s expansion [1].
Ambitious expansion plans in Taiwan
TSMC is aggressively expanding its manufacturing footprint in Taiwan. The company plans to begin construction of its fourth and fifth wafer fabs in Kaohsiung in 2025 [2]. The first fab is scheduled to start mass production of 2-nanometer chips in 2025, with the second and third fabs set for completion in 2025 and 2026 respectively [2]. According to TSMC facility division vice president Arthur Chuang, these five facilities are expected to create 8,000 jobs [2].
Market performance and financial outlook
Recent market activity shows some volatility in TSMC’s performance. The company’s stock remained unchanged at NT$1,090.00 amid broader market declines [3]. The semiconductor sub-index fell 0.27% following the U.S. Nasdaq’s 1.49% tumble [3]. However, industry projections remain positive, with Taiwan’s semiconductor sector expected to exceed NT$6 trillion in production by the end of 2025, representing a 16.5% year-over-year increase [1].
Production costs and pricing strategy
TSMC faces significant cost challenges in its global expansion. The Arizona plant’s production costs are at least 30% higher than those in Taiwan [5]. In response, TSMC plans to raise prices for advanced three- and five-nanometer processes in 2025, while offering reductions for mature processes at specific production volumes [5]. Chairman and CEO Wei Zhejia has set an ambitious target for long-term gross profit margin exceeding 53% [5].