TSMC raises U.S. chip investment as AI demand lifts forecasts

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TSMC raises U.S. chip investment

Highlights

TSMC increases total planned U.S. investment to $265 billion, announcing four more Arizona plants for 2nm-and-below chip and advanced packaging production.
Second-quarter net income surges 77 per cent to NT$706.6 billion and net sales climb 36 per cent to NT$1.27 trillion, beating analyst forecasts.
TSMC raises 2024 capital expenditure outlook to $60 billion-$64 billion, citing persistent AI demand, while warning that global expansion will dilute margins in H2.

Arizona expansion and spending outlook

As reported by Financial Times, TSMC says the additional $100 billion will fund four more production plants in Arizona, including facilities for its most advanced 2nm-and-below chips and advanced packaging operations.

The latest commitment adds to the $65 billion previously pledged under the Biden administration and a further $100 billion announced in March 2025, taking the company’s total planned U.S. investment to $265 billion. TSMC does not give a firm timetable for the new spending, with chief executive CC Wei saying the pace depends on market conditions and customer demand, although the company will try to accelerate the buildout.

TSMC also reports a sharp improvement in operating performance as the AI boom boosts orders. Second-quarter net income rises 77 per cent to NT$706.6 billion, above analysts’ estimates of NT$630 billion, while net sales increase 36 per cent to NT$1.27 trillion. For the third quarter, the company expects revenue of $44.6 billion to $45.8 billion, up 37 per cent from a year earlier, and it raises its full-year capital spending outlook to $60 billion-$64 billion from $52 billion-$56 billion.

Wei says the company’s confidence in the multiyear AI trend remains very high, and he tells analysts that AI chip demand is likely to stay very strong until 2029-30. He also says TSMC does not foresee bottlenecks in its capacity expansion plans, even as the gap between demand and supply remains large.

U.S. manufacturing push and supply chain effects

The investment gives fresh support to the Trump administration’s effort to bring advanced manufacturing back to the U.S. from Asia. U.S. Commerce Secretary Howard Lutnick says the extra spending, following a $250 billion trade deal struck with Taiwan in January, will create tens of thousands of American jobs and strengthen domestic semiconductor production.

At the same time, TSMC says expanding overseas is weighing on profitability. The company warns that international expansion and a higher share of its most advanced chip output are set to dilute margins in the second half of the year, even with support from governments abroad.

The results also underline how AI is reshaping the semiconductor market. TSMC says high-performance computing, which includes Nvidia chips used in AI data centres, grows 20 per cent from the previous quarter and accounts for 66 per cent of revenue in the period. Smartphone chips, once the company’s biggest sales driver, fall 4 per cent quarter on quarter to 22 per cent. The update comes a day after ASML, one of TSMC’s key suppliers, also upgrades its annual forecast as chipmakers race to meet AI-related demand.

In our earlier coverage of AMD’s share-price slide, we noted that semiconductor stocks came under pressure amid macro and geopolitical uncertainty, even as AI-related demand continued to underpin the sector’s longer-term outlook. The article highlighted expectations for a strong Q2 profit increase for AMD and pointed to key technical levels—such as resistance near $498 and support around the $493–$465 zone—as traders weighed near-term volatility against the AI growth narrative.

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