TSMC denies rumors about joint venture with Intel

Taipei, April 17 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) Chairman C.C. Wei (魏哲家) on Thursday denied market speculation that the chipmaker will form a joint venture with U.S.-based chipmaker Intel Corp.

Speaking at an investor conference, Wei said TSMC was not in discussions on any joint venture deal despite the market rumors, adding the chipmaker will not form a joint venture with Intel and other partners to operate the American firm's pure play wafer foundry business.

International news media has reported TSMC, under pressure from the Trump administration with tariffs, will take a stake in the new company to rescue Intel's wafer foundry operations. The joint venture reports have raised concerns over possible business secrete leaks from TSMC.

In response, Wei said TSMC was not in talks on a joint venture deal with Intel and no discussions have taken place regarding technology transfers or technology licensing.

In March, U.S. President Donald Trump, alongside Wei in the White House, announced TSMC would invest an additional US$100 billion in the U.S. state of Arizona to build three more advanced wafer fabs, two IC assembly and one research and development center to bring its total investment in the state to US$165 billion.

Market observers said the huge investments came as Trump pressed ahead with tariff threats to encourage foreign manufacturers like TSMC to invest in the U.S. market, while Wei reiterated the additional investments in Arizona are planned to meet demand from its American clients such as Apple, Nvidia, Qualcomm and Broadcom.

Wei said TSMC plans for its facilities in the U.S. to account for about 30 percent of the total production of the 2 nanometer process and form an independent semiconductor cluster. The 2nm process is still under development and is slated to start mass production in Taiwan in the second half of this year.

On April 2, Trump announced "reciprocal" tariffs on countries that have a larger trade surplus with Washington, including Taiwan, which has been slapped with a 32 percent tariff. The White House announced a 90-day pause on the new measures last week, with a 10 percent duty to be applied instead to all countries except China.

In addition, Trump said on April 12 that his administration would be taking a look at semiconductors and the entire electronics supply chain as part of its National Security Tariff Investigations.

As a private company, TSMC has never been involved in any country-to-country negotiations on tariffs with Washington, Wei said.

Amid uncertainties created by U.S. tariff policies, Wei said TSMC is determined to strengthen its fundamentals, maintain the company's lead over its peers in the global market, upgrade technologies and boost the trust of clients in a bid to improve its competitive edge.

Wei added he has faith that TSMC will continue to outperform the entire pure play wafer foundry business.

At the investor conference, Wei said TSMC has left its guidance for 2025 unchanged, shrugging off uncertainties caused by the Trump administration's tariff policies.

According to Wei, TSMC is expected to see sales grow 24-26 percent in 2025 in U.S. dollar terms, beating the 10 percent increase expected for the entire pure play wafer foundry business.

Due to strong demand from its clients, TSMC has also maintained its capital expenditure for 2025 at US$38.0 billion to US$42.0 billion.

TSMC said 70 percent of the 2025 capex will be used for advanced process development with 10-20 percent dedicated to specialty technology development and another 10-20 percent to advanced IC assembly and testing as well as photomasking development.

As for the second quarter, TSMC Chief Financial Officer Wendell Huang (黃仁昭) said the chipmaker expects to generate US$28.4 billion to US$29.2 billion in consolidated sales with the median figure likely to grow 13 percent from the first quarter on the back of strong demand for the company's advanced 3 nanometer and 5nm processes.

However, due to higher production costs in the chipmaker's overseas facilities, TSMC's gross margin -- the difference between revenue and cost of goods sold -- will range from 57 percent to 59 percent, with the median figure likely to fall 0.8 percentage points from the first quarter, according to Huang.

The chipmaker's first wafer fabs in the U.S. state of Arizona and Kumamoto, Japan started commercial production in 2024.

TSMC is building the second fab in Arizona, while the company has no exact timeframe to break ground on the third under the original US$65 billion plan. Construction of the second fab in Kumamoto will start later this year.

With expansion in Arizona and Kumamoto, the impact on TSMC's gross margin will become more apparent, with a drop of 2-3 percentage points in the initial stage over the next five years, and a decline of of 3-4 percentage points in the later stage of the five year period, Huang said.

However, through cost control efforts overseas and closer cooperation with suppliers and clients, TSMC's gross margin will be maintained at more than 53 percent over the longer term, Huang added.

In addition to the U.S. and Japan, TSMC will build a fab in Germany.

TSMC is planning to build 11 fabs and four IC packaging plants in Taiwan over the next few years.