TSMC invests $165 billion in U.S. chip production

Taiwan Semiconductor Manufacturing Company (TSMC) is making a significant investment of $165 billion in the United States. This move aims to boost U.S. chip production and is expected to increase the company's revenue from U.S. operations to about 25-30% by the early 2030s. Currently, TSMC generates only a small percentage of its revenue outside Taiwan. Analysts believe that this investment could cover nearly 50% of the U.S. need for advanced chips by the early 2030s. This is important for the U.S. as it works towards greater self-sufficiency in semiconductor production, especially amid concerns about supplies and international tensions. However, the investment comes with challenges. It is costly, and analysts say it could reduce TSMC's profit margins. The high expenses of building and operating in the U.S. make it harder for TSMC to maintain its usual profit levels. The company has been cautious about expanding in the U.S. until now. TSMC plans to balance its U.S. growth while keeping its technological edge in Taiwan. Although its U.S. facilities will grow, Taiwan will still lead in innovative technologies. The new plants in Arizona are expected to be important for producing AI chips, with a large portion of the investment dedicated to advanced packaging. TSMC's initial costs in the U.S. are much higher than in Taiwan, with construction expenses significantly greater. While analysts expect costs to decrease as production ramps up, they will likely remain above those in Taiwan. Overall, this investment appears to be a strategic effort to reduce geopolitical risk, although margin pressures may continue due to high operating costs.