TSMC (NYSE:TSM) expects demand for artificial intelligence chips to remain strong for years as it accelerates investment in its manufacturing operations in Arizona, although the company acknowledges labour and infrastructure challenges could affect the pace of expansion.
Following stronger-than-expected second-quarter results, Chief Financial Officer Wendell Huang said the chipmaker remains confident in its long-term outlook and has increased its planned investment in Arizona to $265 billion.
AI demand continues to drive expansion
Huang said TSMC remains encouraged by customer demand and intends to continue investing in production capacity with support from the U.S. government.
“We will continue to invest,” he said, adding that the company was very grateful for U.S. government support.
“We continue to see customers’ strong demand — multi-year structural demand.”
As the world’s leading manufacturer of advanced AI semiconductors and a key supplier to Nvidia, TSMC has become a closely watched indicator of global demand across the semiconductor industry.
The expansion also represents a significant boost for U.S. President Donald Trump’s efforts to increase domestic semiconductor manufacturing.
Trump has repeatedly argued that Taiwan captured a significant share of America’s chip industry and has said that by the time he leaves office, the United States will account for 50% of global semiconductor manufacturing capacity.
Arizona facilities continue to expand
According to Huang, TSMC’s first fabrication plant in Arizona is now operational and delivering manufacturing yields comparable with the company’s flagship facility in Taiwan.
The second fabrication plant is preparing to install production equipment, while construction is progressing on a third facility. Preparatory work has also begun on a fourth fabrication plant and the site’s first advanced chip packaging facility.
Once all current and planned projects are completed, TSMC’s Arizona campus will include 12 fabrication and advanced packaging facilities along with a research and development centre. Huang did not provide a timetable for the latest investment plans.
He noted that expansion remains constrained by practical issues.
“However, there are physical constraints — the number of construction workers available, the infrastructures available,” Huang said. “We’ll work closely with the government to solve these issues.”
Taiwan remains central to advanced chip production
While expanding internationally, TSMC continues to invest heavily in Taiwan, where it plans to build 13 advanced fabrication and packaging facilities over the coming years.
“Land is a scarce resource in Taiwan,” Huang said. “Therefore, whenever there are available lands, we will use them for the most leading-edge technologies.”
“When you ramp the most leading-edge technologies, you need very close collaboration between the R&D and operation functions,” he added. “It has to be in Taiwan. And after it stabilizes, then we can consider transferring overseas.”
Export controls remain a key challenge
Huang also said the company could consider raising additional capital through bond sales if market conditions become favourable.
Asked whether TSMC might issue shares in the United States, he said the company would “not rule out issuing new bonds.”
The chipmaker continues to navigate geopolitical tensions between Washington and Beijing, particularly around U.S. export controls on advanced semiconductors destined for China.
Regarding reports of a U.S. investigation linked to a chip that was ultimately used in a Huawei AI processor, Huang said TSMC continues to review its internal compliance systems while referring questions about the case to U.S. authorities.
“I have to say there is (only) so much we can do in terms of complying with all the rules and regulations, but when the customers sell to customers, they sell to customers,” he said.
“At some point in time, you lose the visibility. That’s the reality.”
Despite recent investor concerns over the long-term sustainability of AI-related spending, TSMC remains confident in its competitive position. Although its Taipei-listed shares fell following earnings, the stock is still up nearly 50% this year.
Huang said the company remains focused on maintaining its technology leadership despite growing competition.
“We do not intend to leave anything on the table,” he said. “Our competitors are good, but we are even better.”
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