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Ever heard the phrase “making hay while the sun shines”?
That’s exactly what Taiwan Semiconductor Manufacturing Company (TSMC) is doing right now. The world’s largest contract chipmaker just reported a spectacular first quarter, with profits soaring 60% to NT$361.56 billion ($11.12 billion) compared to the same period last year. Revenue? Up an impressive 41.6% to NT$839.25 billion.
What’s powering this growth engine? Two words: artificial intelligence.
TSMC manufactures the advanced chips that power everything from your iPhone to the massive data centers running ChatGPT. As companies race to build AI infrastructure, demand for cutting-edge semiconductors has exploded. Advanced chips (7-nanometer and smaller) now make up 73% of TSMC’s total wafer revenue.
But there’s a storm brewing on the horizon.
The Trump Trade Tangle
President Donald Trump has placed a 10% tariff on Taiwanese imports, with threats to raise it to 32% unless a deal is reached after his 90-day pause expires. For a company that manufactures most of its chips in Taiwan before shipping them worldwide, this spells trouble.
Investors have noticed. TSMC’s shares have plummeted over 20% this year – its worst start in three decades. Foreign investors, who had poured $10.4 billion into TSMC in 2023, have now pulled out $8.66 billion in 2025 alone.
The American Pivot
TSMC’s response? A massive American expansion.
Last month, the chipmaker announced an additional $100 billion investment in US facilities, on top of the $65 billion already committed to three plants in Arizona. That’s a $165 billion bet on American manufacturing – unprecedented for a Taiwanese company.
This strategic shift is already bearing fruit:
- AMD will soon manufacture processor chips at TSMC’s Arizona facilities – its first US-made chips ever
- Nvidia has started producing its next-generation Blackwell AI chips at these plants
- TSMC aims to help produce up to half a trillion dollars of AI infrastructure in the US over the next four years
Why This Matters
TSMC isn’t just any company – it’s the technological foundation of the AI revolution. Over 90% of advanced AI chips are manufactured using TSMC’s processes. If global trade tensions disrupt this supply chain, the consequences could ripple through everything from smartphone prices to AI development timelines.
For India, which is pushing its own semiconductor ambitions under the India Semiconductor Mission, TSMC’s challenges highlight both opportunity and caution. Building domestic chip capacity takes hundreds of billions in investment and decades of expertise – but global supply chain vulnerabilities make it increasingly necessary.
The Bottom Line
TSMC finds itself in a precarious position – posting record profits while navigating increasingly treacherous geopolitical waters. Its massive US investment represents both insurance against trade disruptions and recognition that the semiconductor industry is becoming as much about politics as technology.
For now, the AI boom continues to fill TSMC’s coffers. But in the high-stakes world of advanced chipmaking, today’s technological leader can quickly become tomorrow’s cautionary tale if geopolitical winds shift too drastically.
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