TSMC's US$100 billion investment plan a long-term strategy: Analysts

Taipei, March 6 (CNA) Taiwan-based market research companies said Wednesday that Taiwan Semiconductor Manufacturing Co.'s (TSMC) plan to increase its investments in the United States by US$100 billion would provide the company with long-term strategic advantages.

Taiwan Ratings, an investment ratings company based in Taipei, said that TSMC's investment plan -- if implemented successfully -- would help the company "reduce the risk of its assets being concentrated in Taiwan over the long term."

Such a strategy would "alleviate geopolitical and trade policy risks," the investment report said, alluding to potential tariffs that many fear Washington could levy against Taiwan's domestic chip industry.

The report said that even if its capital expenditure increases to US$50-US$55 billion per year from 2025 to 2027, the most valuable company on Taiwan's stock exchange "should still be able to maintain a net cash position supported by strong profitability and operating cashflow."

However, according to the S&P Global Company, TSMC's new production capacity in the U.S. will take longer to achieve profitability than if such capacity was built in Taiwan.

TrendForce, another Taipei-based market research company, also issued a report on Wednesday that suggested that even if TSMC's US$100 billion investment goes smoothly, the planned fabs would "enter mass production after 2030 at the earliest."

Although TSMC's production capacity in the U.S. could reach 6 percent by 2035, its production capacity in Taiwan would remain at or above 80 percent, the market research report said.

TrendForce emphasized that TSMC's latest investment pledge is a continuation of a longer-term trend in the company's supply chain differentiation strategy.

The Taiwanese chip behemoth accelerated this strategy after 2018 due to factors including "global trade disputes" and the COVID-19 pandemic, which persuaded governments worldwide to seek to build production capacity in semiconductor technologies in local markets.

However, the report suggested TSMC's plan to expand investment in the U.S. would contribute to a decline in Taiwan's dominance of the global chip industry over the next five years.

Taiwan held 71 percent of the global market share in the production of advanced processes and 53 percent for mature processes in 2021, but this will drop to 58 percent and 30 percent by 2030, TrendForce said.

The investment ratings companies' reports follow the joint announcement in Washington, D.C., by U.S. President Donald Trump and TSMC Chairman C.C. Wei (魏哲家) on Monday (U.S. time) that the Taiwanese chip manufacturer would invest the 12-figure sum to build facilities including three wafer fabs and two advanced packaging plants in the U.S.

In November, Trump said that Taiwan "stole" America's chip industry and suggested he might implement a 10 percent tariff on all U.S. imports from the country, leading to fears that Taiwan's economy -- including its chip industry, in which TSMC plays a major part -- would be negatively affected by such a measure.