Trump's policies to shape TSMC's business outlook: Central bank

Taipei, March 22 (CNA) How U.S. President Donald Trump implements his policies in his second term is expected to influence the business outlook of Taiwan Semiconductor Manufacturing Co. (TSMC), which recently announced a US$100 billion expansion in Arizona, according to Taiwan's central bank.

In a report released after its quarterly policymaking meeting on Thursday, the central bank said that Trump's policies, which may continue to create economic uncertainties, are expected to weigh on TSMC's operations following its major investment pledge.

On March 3, TSMC announced plans to invest US$100 billion in Arizona to build three advanced wafer fabs, two IC packaging plants and a research and development center, increasing its total investment in the state to US$165 billion amid tariff threats from Trump.

TSMC's first fab in Arizona has begun production using the 4-nanometer process, while the second fab, designed for the more sophisticated 3nm, 2 nm, and A16 processes, is under construction and expected to begin production in 2028.

The third fab, about which TSMC has said little to date, is expected to begin production by 2030 using 2nm or more advanced processes.

Market analysts have raised concerns about the possible impact on TSMC's profit margin due to higher operating costs.

The central bank said that after TSMC announced the additional US$100 billion investment in Arizona, foreign institutional investors reassessed TSMC's valuation and shifted to the sell side of the stock.

According to the central bank, as TSMC accounts for almost 40 percent of the local stock market's total value, how the chipmaker fares amid uncertainties created by Trump's policies is expected to dominate the movement of the local main board.

TSMC shares were also affected by the presence of China-based AI startup DeepSeek and its low-cost AI model, which raised concerns about future AI investments, the central bank said.

So far this year, the Taiex, the weighted index on the Taiwan Stock Exchange, has fallen by 3.59 percent, with TSMC losing 9.58 percent.

As of March 14, foreign institutional investors sold NT$521.8 billion worth of shares on the main board, including a net sell of NT$209.7 billion worth of TSMC shares, according to the central bank.

The central bank said that such a large net sale has impacted the local foreign exchange market.

In addition to Trump's policies, the central bank said that geopolitical tensions and AI development in the global market are expected to be key factors influencing TSMC's operations this year.

Geopolitical unease is expected to continue reshaping the global supply chain, with TSMC likely to be impacted. However, as long as AI development continues, TSMC is expected to maintain the largest share of the world's pure-play wafer foundry business, the central bank said.

These external factors are expected to affect both TSMC and the entire electronics industry in Taiwan, the central bank said.

Taiwan's IC exports totaled US$165.0 billion in 2024, up from US$78.2 billion in 2016, while the industry accounted for 35 percent of the country's total exports in 2024, up from 28 percent in 2016, according to the central bank.