TSMC raises planned US investments to up to $265 billion

In the current second quarter, TSMC significantly exceeded analyst expectations. Net profit rose by 77 percent to approximately 19.15 billion euros, according to the company, while revenue climbed 36 percent to just under 35 billion euros. The result marked the fifth consecutive record profit and the ninth consecutive double-digit percentage increase. TSMC chief Wei said: "Die Nachfrage übersteige das Angebot bei weitem." According to Wei, the company has reached its capacity limits and must invest massively to keep pace.

Expansion in Arizona and Advanced Packaging

For the third quarter, TSMC forecasts revenue of between 38.9 billion and 40 billion euros, which would correspond to growth of around 38 percent compared with the prior-year period. Management cited persistently strong demand for high-performance chips for artificial intelligence applications as the driver of this momentum. Wei said: "Ich gehe davon aus, dass die Nachfrage von heute an – wahrscheinlich bis 2029 oder 2030 – sehr stark sein wird." He did, however, acknowledge that he could not definitively rule out possible interim corrections in the market: "Ob es zwischendurch zu einem Rückgang kommen wird oder nicht, weiß ich nicht so genau. Aber der Trend deutet meiner Meinung nach darauf hin, dass wir Zeugen einer Art neuer Industrie werden, einer neuen KI-Industrie."

The additional funds are to flow, among other things, into so-called Advanced Packaging, in which multiple chiplets and memory stacks are combined on a common substrate. Until now, TSMC had left this further processing in the US to partners such as Amkor. With its own facilities and a research center, announced in March 2025, the group aims to cover this step of the value chain domestically in the future. The already announced additional fabs in Arizona are expected by observers to begin operations no earlier than 2030 or later.

Customer structure and technology course

On the technology front, TSMC is keeping a low profile. Wei committed only to "2 Nanometer oder besser" for the new US fabs, without pinning down a specific, more advanced generation. In Taiwan, the company plans to stay more than one generation ahead by 2029 with the planned A13 and A12 processes. This gap is also reflected in the customer structure: the first Phoenix fab is reportedly not optimally suited for Apple; Apple processors are manufactured in Taiwan using 2-nanometer technology. Customers of the Arizona production include AMD, whose Epyc server processors are manufactured there, as well as Nvidia, whose Blackwell accelerators likewise come from Phoenix.

The investment offensive is also reflected in the capital budget. TSMC raised its 2026 capex target to $60 to $64 billion, equivalent to roughly 52 to 56 billion euros and about 14 percent above the previous plan. The company cited increased machinery prices as one reason for the higher spending. Overall, according to its own statements, TSMC is building thirteen new plants in Taiwan, one in Japan, and is continuing work on completing the ESMC plant in Germany.

Market reaction

On capital markets, the news triggered mixed reactions. TSMC shares listed in Frankfurt fell by more than two percent after the figures. The price decline was part of a broader correction in technology stocks that had previously been set off by disappointing quarterly results from South Korean memory chipmaker Samsung. Andreas Lipkow, an analyst at broker CMC Markets, attributed the decline to more extensive profit-taking. Sentiment remains cautious: "die Skepsis der Investoren über die weitere Entwicklung im KI- und Rechenzentrumsgeschäft in der spätzyklischen Phase bleibt", according to Lipkow.

The broader German equity market also suffered from the signals from the chip sector. The DAX slipped below the 25,000-point mark at midday and lost 0.5 percent to 24,862 points. Infineon shares fell 2.6 percent to a two-month low, while Siemens Energy lost 2.3 percent. Jochen Stanzl, an analyst at Consorsbank, described the market situation with an image: "Was wochenlang wie eine Einbahnstraße für Anleger ausgesehen hat, ist zu einer Achterbahnfahrt der Kurse unter stark erhöhten Schwankungen geworden." Despite the recent setback, TSMC shares are around 60 percent above their level at the start of the year and have nearly doubled within one year; over twelve months the price gain is almost 120 percent.

TSMC's tailwind comes against the backdrop of a broader race for semiconductor capacity for AI applications. Just on Wednesday, Dutch equipment maker ASML, the world's largest supplier of lithography machines for chip production, had raised its forecasts and signaled record revenue for the full year. ASML shares, however, closed slightly in the red. Observers see this as an indication that expectations along the supply chain remain high, while short-term setbacks must be factored in.

Geopolitical and industrial-policy context

In the medium term, TSMC intends to significantly expand its US presence further, according to Wei's remarks. "Denkbar wären etwa vier weitere Werke, sagte er." This would turn the group's Arizona footprint into a cluster covering the entire value chain – from wafer manufacturing to the most advanced packaging processes and research activities. Analysts see this as a further building block of US industrial policy, launched with the aim of concentrating critical chip capacity on domestic soil and becoming less dependent on Asian production sites.

Apple and Nvidia are among TSMC's most important customers. Apple's flagship processors are manufactured in Taiwan using 2-nanometer technology, and Taiwan is likely to remain ahead in the most advanced nodes in the coming years. TSMC plans to stay more than one generation ahead in Taiwan by 2029 with the A13 and A12 processes. For US manufacturing, this means: it is expected to lag one generation behind Taiwan's leading fabs, but will be able to serve demand for high-performance chips for data centers and AI accelerators in the United States.

With a market capitalization of nearly two trillion US dollars, equivalent to roughly 1.75 trillion euros, TSMC is currently the only non-American company in the global top six. Only Nvidia, Apple, Alphabet, Microsoft, and Amazon stand ahead of TSMC. This underscores the significance of the contract manufacturer in the digital economy's value chain. According to the company, the share of advanced high-performance chips in total revenue has risen significantly in recent years and now accounts for around a quarter of revenue, up from just six percent in the third quarter of 2023.

The additional investments are, according to TSMC, also a response to the geopolitical debate about supply chains and technological sovereignty. The EU energy agency recently warned of growing dependence on critical raw materials. This picture fits the fact that the ESMC fab in Germany is not yet completed and TSMC is simultaneously pushing ahead with expansion in Taiwan and Japan. Overall, a global network of manufacturing sites is emerging that is politically desired but economically viable only if demand continues as expected.

Risks and outlook

Despite the record figures, risks remain. Industry observers point out that the technology sector is in a late-cycle phase and that a number of indicators – from Samsung's weakness to macroeconomic drag – suggest a possible consolidation. Should demand for AI chips drop off in the short term, the high investments could weigh on margins. Conversely, a delayed expansion would be risky, because bottlenecks in high-performance chips could, according to Wei, slow the entire growth momentum of the AI industry.

For the Arizona site, the move represents a massive upgrade. Once known primarily as a first-wave production location, the region could in time see four additional fabs as well as packaging and research facilities. Arizona would thereby rise to become one of the most important semiconductor clusters outside Asia – with significant implications for suppliers, the labor market, and the competitiveness of US industry overall. TSMC itself speaks of a generational project that will only fully unfold over the coming ten years.

The coming months are likely to show how concrete the new plans become. Wei continued to be vague about the exact timing and scope of the additional investments. Given past announcement practice – three additional fabs in Arizona were announced as recently as April 2024, followed in March 2025 by packaging sites and a research center – TSMC can be expected to communicate the next expansion steps in tranches. What is already clear today, however, is that the course has been set for a significant shift in the global semiconductor landscape.