tsmc faces margin squeeze amid us expansion

2025-08-11 tsmc

Taipei, Monday, 11 August 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) is navigating a complex financial landscape. Market analysis suggests a potential decrease in profit margins for tsmc. This is happening even as the company invests heavily in expanding its facilities within the United States. Investors are watching closely. They are concerned about tsmc’s ability to sustain profitability during this period of global expansion. Analysts point to several factors. These include increased operational costs and the challenges of maintaining pricing power in a competitive market. The stock is under pressure.

Financial performance

TSMC’s July 2025 revenue reached approximately 323.17 billion new Taiwan dollars, a 22.5% increase from the previous month and a 25.8% increase from the same period last year [7]. This figure marks the second-highest monthly revenue in the company’s history and a record high for the same period [7]. The company’s revenue for the first seven months of 2025 totaled approximately 2.096 trillion new Taiwan dollars, a 37.6% increase compared to the same period in 2024, also a record [7]. Despite these gains, concerns about profit margins persist due to various economic factors [1][7].

Margin pressures

TSMC anticipates a decrease in gross profit margin in the third quarter of 2025, projecting a range of 55.5% to 57.5% [7]. This is down from the 58.6% reported in the second quarter [7]. The expected margin decline is attributed to the appreciation of the new Taiwan dollar, which is estimated to impact revenue by 6.6% and reduce the gross margin by 2.6 percentage points [7]. These currency fluctuations, coupled with increased costs associated with overseas expansion, are key factors affecting TSMC’s profitability [7].

us expansion and geopolitical factors

TSMC’s strategic move to expand its manufacturing footprint in the United States is driven partly by geopolitical considerations. The us is offering exemptions from tariffs to companies that establish or are in the process of building facilities there [6]. This has incentivized TSMC to accelerate its Arizona plant construction, creating substantial business opportunities for suppliers in areas like cleanroom engineering, electromechanical systems, and gas supply [6]. This expansion is viewed as a boon for specific supply chain stocks. These include companies such as Hantang and Fan Xuan, with projected earnings per share (EPS) reaching new highs [6].

expert opinions and market outlook

Despite potential short-term fluctuations, analysts remain optimistic about TSMC’s long-term prospects, particularly due to the growing demand for high-performance computing (HPC) and artificial intelligence (AI) applications [7]. TSMC’s chairman anticipates approximately 30% revenue growth in US dollar terms for 2025 [7]. However, experts also caution that nearly 40% of TSMC’s order book is susceptible to economic conditions and tariff-related disruptions in the consumer market [7]. These factors suggest that while TSMC’s stock exhibits high growth potential, investors should remain aware of potential risks [2][7].

stock performance and supply chain benefits

TSMC’s stock has experienced volatility, with its American depositary receipts (ADR) showing intraday fluctuations [7]. Despite these fluctuations, the long-term outlook remains positive, supported by HPC and AI demands [7]. TSMC’s ongoing expansion projects, including six plants in the US and advanced packaging facilities in Taiwan, provide substantial order visibility for plant engineering firms [6]. Hantang, with a substantial order backlog, is expected to benefit significantly, potentially becoming a leading stock in the plant engineering sector [6]. Fan Xuan also anticipates revenue growth, driven by improved profitability and increased orders [6].

Bronnen

us expansion profit margins