TAIPEI (Taiwan News) — Despite the large amount of TSMC's newly announced US investment, an analyst said it would only comprise a small percentage of its production. 

Kuo Ming-Chi (郭明錤), an analyst with TF International Securities, said on Tuesday that TSMC's NT$3.29 trillion (US$100 billion) plan to build five more facilities in the US was a “win-win negotiation,” per Medium. Kuo said that while TSMC's investment appears substantial, “the lack of details provides the flexibility for spending based on future conditions.”

He said the investment's ambiguity should soften the impact on TSMC’s profitability. He said that TSMC’s greatest challenge remains market demand and its ability to maintain its lead in advanced process technology.

Kuo estimated that TSMC’s US fabs will have an average gross margin of around 30% to 35%. Once fully operational, these fabs are expected to reduce TSMC’s overall gross margin by 1.5% to 2%. 

To mitigate this negative impact, TSMC will further push its supply chain for cost reductions, Kuo said. While this will put considerable pressure on existing suppliers, it will also create opportunities for new suppliers.

In April 2024, TSMC announced plans to build a third fab in Arizona to produce 2nm chips, raising investments in the US to US$65 billion. On Monday, TSMC CEO C.C. Wei (魏哲家) said the firm will build three more chip fabs, two advanced packaging facilities, and an R&D center in Arizona, bringing total US investments to US$165 billion.

According to Kuo, even if TSMC completes all planned advanced-node fabs in the US, they will still account for only about 5% to 7% of the firm's global capacity. Kuo predicted that US customers will remain highly dependent on TSMC’s production capacity in Taiwan “for years.”

In addition, Kuo said the successful operation of TSMC’s US fabs in the coming years will still rely heavily on remote technical support from TSMC’s teams in Taiwan.