Key Highlights
- Taiwan Semiconductor’s CEO C.C. Wei revealed at the annual shareholder meeting that chip production capacity will remain below AI demand levels for the foreseeable future, despite US expansion efforts.
- The semiconductor giant maintained its annual revenue growth projection exceeding 30%.
- TSMC outlined plans for four more US fabrication facilities beyond the six previously announced, necessitating approximately $100 billion in additional investment.
- Wei disclosed that TSMC has acquired ASML’s advanced High-NA EUV lithography systems but will delay mass production deployment until economic viability is achieved.
- Shares of TSM declined 1.7% in Taipei trading following Broadcom’s weak forward guidance.
Taiwan Semiconductor Manufacturing (TSM) stock experienced a 1.7% decline in Taipei trading Thursday following CEO C.C. Wei’s announcement that the chipmaker will struggle to satisfy AI-related semiconductor demand for an extended period — despite aggressive expansion of American manufacturing operations.
Taiwan Semiconductor Manufacturing Company Limited, TSM
“Meeting customer demand in full will take considerable time,” Wei stated during TSMC’s yearly shareholder gathering in Hsinchu, Taiwan.
Despite Thursday’s decline, TSM shares have surged more than fourfold during the past three years, fueled by remarkable expansion in its primary business of manufacturing chips for industry leaders including Nvidia and AMD.
Wei confirmed TSMC’s projection for annual revenue expansion surpassing 30%. The semiconductor manufacturer elevated this forecast recently in April, simultaneously indicating that capital expenditures would likely approach the higher end of a bracket extending to $56 billion.
The supply-demand imbalance stems from the industry’s largest players. Leading hyperscale cloud providers are projected to allocate a combined $725 billion toward AI infrastructure investments this year alone, with TSMC serving as the primary manufacturer for cutting-edge chips driving this massive deployment.
Notwithstanding the capacity limitations, Wei emphasized that TSMC will avoid implementing aggressive pricing increases. The objective, he explained, is maintaining business consistency and reliability for customers.
American Manufacturing Footprint Expands
Under a bilateral US-Taiwan trade framework, TSMC is planning to construct a minimum of four additional semiconductor fabrication facilities in America, supplementing six plants already in development. This expansion adds approximately $100 billion in capital requirements beyond the $165 billion previously allocated.
Wei indicated that two Arizona land parcels TSMC has secured should accommodate its American expansion requirements for the next ten years.
The American manufacturing push partially addresses customer demands. Nvidia, Broadcom, and competing firms are vying for production capacity at TSMC’s most sophisticated manufacturing nodes, while geographic distribution mitigates geopolitical and logistics vulnerabilities.
TSMC’s workforce will share in the success. Wei announced that employees will receive average bonus increases exceeding 30% this year, as mounting pressure on AI sector leaders demands broader profit distribution.
Advanced Lithography Equipment Secured
Wei responded to shareholder inquiries regarding TSMC’s strategic positioning in advanced semiconductor manufacturing technology, particularly concerning ASML’s High-NA EUV lithography equipment.
These sophisticated machines, capable of creating smaller and more densely packed transistor patterns compared to existing technology, carry price tags reaching $400 million per unit. Intel has already implemented the technology. TSMC has not yet deployed it for volume manufacturing.
Wei confirmed TSMC has acquired the equipment and is performing research and development activities. The delay involves financial considerations, not technical capabilities. TSMC will introduce the machines to production facilities only after achieving profitable large-scale operation.
“We have already acquired this equipment, and our engineering teams are actively pursuing related research and development initiatives. It simply hasn’t been deployed for high-volume mass production yet,” Wei explained.
He refused to specify the quantity of units TSMC has purchased.
The statements echo comparable remarks from TSMC executive Kevin Zhang in April, when he characterized the new equipment as “very expensive” and noted that current objectives remain attainable with standard EUV technology. Those comments temporarily pressured ASML stock downward.
Wei informed shareholders Thursday that TSMC’s present strategy emphasizes optimizing existing chipmaking equipment performance to decrease production expenses.
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