Key Points
- TSMC and President Trump announced an additional $100 billion US investment in addition to the previously announced $65 billion.
- The deal aims to build three front-end fabs, two advanced packaging facilities, and a major R&D center.
- Bernstein analysts call the arrangement “the least bad” outcome for TSMC as it keeps Intel only as a customer.
- The investment is expected to resolve production bottlenecks and boost supply for AI and advanced chips.
In a significant move, TSMC and President Donald Trump announced plans to expand the US investments in semiconductor manufacturing, with a new commitment of $100 billion on top of a previously announced $65 billion. According to Bernstein analysts, this deal represents “the least bad” outcome for TSMC, allowing it to meet Trump’s aggressive push for increased domestic production without the complications of an “inorganic” arrangement with rivals like Intel.
The proposed investment, which would become the largest single foreign investment in US history, includes constructing three new front-end fabrication plants, two advanced packaging facilities, and a major research and development center. These new facilities are expected to help resolve current bottlenecks in chip production and meet the rising demand from key clients such as Nvidia and AMD, particularly in the burgeoning field of AI and other advanced computing applications.
Bernstein’s Mark Li and his team point out that by keeping Intel at arm’s length—maintaining it as a customer rather than a partner—TSMC can avoid the burdens of equity involvement or technology transfer that might dilute its competitive edge. Despite remaining a customer and rival, Intel is viewed as less threatening due to its higher costs, less efficient operations, and questionable outlook on its 18A chip technology.
While the capital infusion might raise short-term cost pressures, TSMC expects to benefit from economies of scale and cost reductions in other areas. The flexibility offered by a loosely defined timeline for the $100 billion investment will help TSMC manage these expenses effectively. Moreover, by developing advanced packaging facilities, TSMC will complete an essential part of the AI supply chain in the United States while still retaining the freedom to push forward with cutting-edge front-end technology.
Bernstein analysts also noted that the anticipated marginal increase in TSMC’s wafer fabrication equipment spending in the US will likely be offset by reduced investments in Taiwan. With the current US political climate, the prospect of additional chip tariffs now seems even less likely. Bernstein maintains an Outperform rating on TSMC shares, underscoring confidence in the company’s strategy.
