Taiwan Semiconductor Manufacturing Co. NYSE:TSM said its expanding manufacturing footprint in the United States is expected to pressure profit margins over the next several years, even as demand for advanced artificial intelligence chips remains strong.
TSMC has pledged about $200 billion in U.S. investments since 2025, including a recently disclosed $100 billion commitment to advanced semiconductor manufacturing and packaging facilities. The expansion comes as the company responds to customer demand and broader U.S. policy efforts aimed at increasing domestic chip production.
Chief Financial Officer Wendell Huang said overseas fabrication plants are diluting gross margins despite stronger-than-expected second-quarter profitability. TSMC expects the margin impact from international facilities to reach about two to three percentage points in the early stages of expansion and widen to three to four percentage points as projects mature.
TSMC reported second-quarter net profit rose 77.4% from a year earlier, supported by continued AI-related demand. Analysts said higher production costs in the U.S. could eventually be passed on to customers because of TSMC's leading position in advanced chip manufacturing, while geopolitical and supply-chain considerations continue to encourage geographic diversification.