TAIPEI (Business Today/TVBS News) — Under the U.S. President Donald Trump administration's new policies, manufacturing in the United States has become inevitable, but some see Taiwan Semiconductor Manufacturing Company's (TSMC, 台積電) increased investment in the States as a significant negative development. In the face of political shifts and external skepticism, TSMC is navigating unprecedented challenges that demand careful global strategic planning and a demonstration of competitive strength. What was inevitable has finally come to unfold.
Following the previously promised three wafer fabs and US$65 billion investment, TSMC Chairman C.C. Wei (魏哲家) met with President Trump at the White House on March 3, announcing an additional US$100 billion investment to build three new wafer fabs and two advanced packaging plants in Arizona. A research and development center will also be established in the state.
This is, in fact, the best choice for TSMC after more than a month of turmoil. There's no investment in Intel, no 100% taxation, just more investment in the United States. As long as technology doesn't leak out and TSMC can secure the biggest opportunity in America's return to manufacturing, this is the best outcome for TSMC. That's what I said during several media interviews last week. Many people may feel this is a major negative development for TSMC. Here, we summarized the five main market concerns and analyzed them one by one.
Question 1: Will Increased Investment in U.S. Plants Significantly Reduce Profit Margins?
Revenue Increases, U.S. Market Position Strengthens
The answer is yes, increasing U.S. plant capacity will reduce gross margins. However, I believe that revenue will increase, and TSMC will establish a very solid position in the U.S. market, making it difficult for competitors like Samsung and Intel to compete with TSMC. Trump's push for America's return to manufacturing brings the biggest change: all future manufacturing business decisions will no longer be based solely on cost or benefit because when politics intervenes, many things can be transformed. Previously, no one thought the United States could return to manufacturing or that U.S. semiconductor manufacturing could grow from its current 10% global market share to 20% in the future, but Trump is making this possible through his forceful approach.
Trump won't consider that your operating costs will increase or that things will be a bit more expensive; he only considers that he wants the market and has made up his mind. This thinking will become the norm, and business leaders' mindsets must change accordingly. Two weeks ago, Richard Lee (李詩欽), chairman of the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA, 台灣電子電機公會) and former head of Inventec (英業達), said Taiwan's AI server companies would expand investment in Texas, with major companies announcing results in May. Moving manufacturing to the U.S. has become an unstoppable trend.
Moreover, people can't accept investing in the U.S. now because it's too expensive, but this might ignore an important fact: technological advances and AI will reduce manufacturing costs. Such changes often exceed everyone's expectations. Everyone can recall that in 2018 when Trump demanded that companies leave China, many electronics industry executives said it was "impossible."
Later, everyone moved and reduced their production ratio in China, resulting in profits that didn't worsen but actually improved. In 2024, many Taiwanese companies have achieved record-high revenue and profits. Looking at companies that have already published financial reports, Quanta (廣達), Wistron (緯創), Wiwynn (緯穎), and TSMC all broke historical highs. What does this mean? Taiwanese businesses have maintained their profit margins through years of accumulated capabilities, such as lean management skills, automation, and new AI technologies. More importantly, the key isn't profit margin but whether they've captured business opportunities and expanded the market.
Taiwanese companies have all increased revenue and expanded their markets by seizing AI and chip opportunities. This is the actual situation of Taiwan's tech industry during seven years of ongoing U.S.-China tech and chip wars since 2018.
Question 2: Will Establishing an R&D Center in the U.S. Prevent TSMC from Keeping Its Roots in Taiwan?
The second question: with even the R&D center moving there, people are worried whether TSMC can keep its roots in Taiwan anymore.
Adjusting the R&D center also takes time. It can't move immediately — it will take at least three to five years, or up to 10 years before U.S. R&D gradually shows clear deployment and benefits. Moreover, R&D projects in the States and Taiwan will likely be differentiated. Research in Taiwan is expected to focus on process technology and yield improvement, while the U.S. R&D center will focus on exploring more advanced technologies, such as advanced materials, silicon photonics, or more advanced process technologies. Even future quantum computing technologies could be research directions for the U.S. R&D center.
As a world-class enterprise, TSMC must take advantage of new opportunities worldwide, especially talent—the most crucial part of future competitiveness. Increasing U.S. talent deployment and utilizing excellent talent contributions to R&D will complement Taiwan's talent and advanced technology shortages, bringing positive benefits to TSMC's global deployment.
Self-Strengthening Through Capital Increase, Intel Becomes the Variable
The third point is that Trump said there would be no subsidies for the next U$100 billion investment. How should we view this issue?
The answer is: "If there's none, then there's none!" From now on, it depends on TSMC's own efforts. As a foreign company, Samsung would not receive subsidies if it increased its investment. Whether the United States will invest in Intel or provide new subsidies is hard to say — America will ultimately support its domestic companies, which creates uncertainty. However, corporate competitiveness must always return to fundamental competition. TSMC has sufficient technical strength and financial advantages to begin the next round of competition with Intel. Currently, Intel is still quite chaotic internally, has no direction for future development, and its manufacturing department is losing terribly. It will take some time to escape these difficulties.
Question 4: Does Taiwan No Longer Have Its "Silicon Shield"?
Taiwan's Security Cannot Rely Solely on TSMC
Many people mention this fourth point: With TSMC moving many production lines to the United States, does Taiwan no longer have the "silicon shield" it once relied on?
Semiconductors, serving as a silicon shield, have indeed been one of Taiwan's protective weapons, but how could Taiwan's national security possibly rely on just one company like TSMC? If Taiwan lacks awareness of friend and foe, doesn't increase defense spending, has no advanced weapons deployment, everyone only wants to serve three months in the military, and there's no preparation for total defense, relying solely on semiconductors to protect Taiwan is simply a joke.
Thinking that relying on TSMC alone can secure promises to protect Taiwan is the most unacceptable lazy mentality. TSMC will develop from "Taiwan's TSMC" to "the world's TSMC." Taiwan ultimately cannot stop this, and locking TSMC in Taiwan is unrealistic. Many people haven't realized this yet, but it will gradually happen in the future.
Question 5: Is "Embracing America" and Raising Costs a Major Negative Factor?
Changing Mindsets, Creating Maximum Opportunities
Finally, everyone will curse Trump. During Trump 1.0, the policy focus was forcing many companies to "leave China," but in Trump 2.0, it has become forcing industries to "embrace America." While 1.0 was good for Taiwan, 2.0 has posed a major challenge.
It's normal to think this way, and it's indeed the case. However, the key point remains: change is necessary, and everyone's mindset needs to adjust accordingly. In fact, many Taiwanese electronics industry managers have already adjusted their mindsets, but the market hasn't caught up yet. It's still quite worried about future variables and holds a very negative attitude toward TSMC's larger investment in the United States and the top Taiwanese electronic companies moving factories to Texas, viewing these as major negative factors.
But in reality, many business owners are concerned about where the business opportunities are. If they don't go, will the opportunities disappear? Political pressure is one thing, but the most important ability of entrepreneurs is finding ways when there seems to be no way. Companies must strive for maximum benefits within restricted conditions and environments, even on predetermined battlefields. This principle applies to the current situation of creating maximum opportunities under limited conditions to fulfill the "American Dream" for the next five to ten years.
Seeing the news of TSMC's increased investment in the United States reminds me of 1997 when TSMC announced a 10-year NT$400 billion investment in the Southern Taiwan Science Park (南科), and UMC announced an NT$500 billion investment. These astronomical investment amounts shocked everyone, and the late Formosa Plastics Group (台塑集團) Chairman Wang Yung-ching (王永慶) even jumped out to call it an "exaggeration"! Looking back at this history, TSMC not only achieved that unimaginable figure but far exceeded the initial investment commitment. This represents that the scale of the global semiconductor industry has indeed exceeded everyone's past imagination. Today, TSMC's additional US$100 billion investment in the United States evokes a similar feeling.
Every country and company must eventually turn in their answer sheets to Trump's tasks. TSMC's answer is probably the best solution imaginable at present. We hope the TSMC management team has the ability to properly respond to various challenges now and in the future. ★
This article is excerpted from the January issue of Business Today; for more articles, please visit their website: https://www.businesstoday.com.tw/
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