TSMC's Major Investments and New U.S. Facilities

On February 12, Taiwan Semiconductor Manufacturing Company (TSMC) announced key decisions following its board meeting at its new Arizona plant in the U.S. The company approved a capital budget of approximately $17.14 billion (around NT$563.9 billion) for long-term production capacity expansion, marking a significant step in its ongoing global investment efforts.

In addition, TSMC authorized up to $10 billion in additional capital for its subsidiary, TSMC Global, in a bid to manage foreign exchange risks. This move builds upon TSMC's broader strategy of continuous investment to strengthen its global footprint, particularly in the U.S. market. Though the announcement did not include direct references to new U.S. investment projects, analysts believe this marks a strong indication of TSMC's commitment to expanding its American manufacturing presence.

The capital budget will support the construction and upgrade of advanced process capacities, as well as specialized packaging and facility development. The company also continues to advance its global operations, with significant machinery and equipment moves, including the disposal of equipment worth over $450 million to subsidiaries, ensuring ongoing operational efficiency across its global facilities.

Focus on North American Expansion

Amid rising geopolitical tensions, TSMC's North American customer base is growing increasingly crucial. Over 60% of TSMC's revenue now comes from the North American market, with this figure expected to rise further. As political pressures on the semiconductor supply chain increase, TSMC's strategic positioning in the U.S. is seen as essential. The company's first Arizona plant is already seeing high demand for its products, and the second plant is expected to focus on 3nm processes, with production slated to ramp up in 2027.

Rumors of a Potential TSMC-Intel Collaboration

At the same time, rumors are circulating about a potential collaboration between TSMC and Intel, prompted by the U.S. government's push for more domestic chip manufacturing. According to Wall Street analysts, the U.S. government may encourage TSMC to apply its expertise in high-volume production using EUV (extreme ultraviolet) lithography to Intel's fabrication processes, particularly for advanced 3nm and 2nm technologies.

The speculation suggests that TSMC could send engineers to Intel's U.S. facilities to assist with fine-tuning its advanced manufacturing processes, ultimately leading to a joint venture where both companies share ownership, with TSMC managing operations. This potential venture could align with U.S. Chip Act funding to boost local production.

However, there are significant technological and business challenges that make such a collaboration uncertain. TSMC and Intel use different fabrication technologies and tools, which would make integrating processes difficult. Additionally, TSMC has little incentive to collaborate closely with a rival like Intel, especially given the competitive nature of the semiconductor industry. Furthermore, TSMC is already accelerating its own investments in Arizona, which might make a partnership with Intel unnecessary.

Conclusion: Geopolitical Pressures Shape Semiconductor Landscape

As TSMC navigates the complex landscape of global semiconductor manufacturing, its ongoing investments in the U.S. signal a strong commitment to meeting the increasing demand for advanced chips. Meanwhile, speculations about potential collaborations, including with Intel, underscore the growing role of geopolitics in shaping the future of the semiconductor industry. Whether these rumors materialize or not, TSMC's strategic moves will likely continue to define its position as a key player in the global chip manufacturing market.