TSMC stands out as the most successful non-US company in negotiations with the Trump administration

[Daniel Nenni]

TSMC’s newly announced US investment plan, unveiled on March 4, 2025, differs from the original by adding $100 billion, cutting one advanced-node fab, and including an extra advanced packaging plant and R&D center.

This represents a win-win negotiation. The US government clearly knew what it wanted, while TSMC balanced government demands with commercial interests to maximize shareholder value.

Though the $100 billion investment seems massive, the lack of details provides the flexibility for spending based on future conditions, softening the impact on profitability. Its biggest challenges remain market demand and leadership in advanced-node technologies.

The US government’s push for another advanced packaging plant seeks to increase the share of AI chips made entirely in the US, underscoring AI’s role in national security and commerce. The new R&D center will strengthen US semiconductor research capabilities.

The Trump administration has demonstrated to the American people its superior execution efficiency in semiconductor localization compared to the previous administration while strengthening negotiating power with China. TSMC’s new investment round significantly reduces geopolitical, tariff, and antitrust risks, maximizing shareholder value.

The following is the in-depth analysis integrating my latest industry survey.

1. Stronger US-Taiwan Cooperation**. According to TSMC’s plans, even after all US advanced-node fabs are completed, they will only account for approximately 5–7% of the company’s global capacity. The US clients will rely heavily on TSMC’s Taiwan-based capacity for years, and running the US plants will depend on substantial remote support from Taiwan’s technical teams.

2. Gross Margin Impacts and New Beneficiaries. US plants have an average gross margin of about 30–35%. Once fully operational, they will likely reduce TSMC’s overall gross margin by 1.5–2%. To offset this, TSMC will squeeze its supply chain for lower prices, posing challenges for current suppliers while opening doors for new ones and providing potential investment opportunities.

3. Investment Amount Concerns Overstated. Investors may worry over the impact of the $100 billion investment on profitability, but such concerns are overstated. Beyond the flexible spending adjustments mentioned above, my understanding is that TSMC controls its overseas investments within certain proportions. This likely means reduced investment in Germany and Japan going forward. Additionally, with a new advanced packaging plant in the US, TSMC may no longer need to purchase Innolux’s factory.

4. R&D Center Benefits. A US R&D center brings two key benefits: 1) Tapping talent from Intel, IBM, and upstream firms, and 2) Tighter collaboration with US material suppliers — an area where TSMC now faces bigger challenges than N2 or N16 yields.

5. Short-Term Concerns, Long-Term Positive for TSMC. I get why the market’s worried about TSMC’s latest US investments, but these fears are overblown. As noted earlier, TSMC’s fundamental challenges are still market demand and staying ahead in advanced-node tech.

Written by 郭明錤 (Ming-Chi Kuo)

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[Daniel Nenni]

As I said before, the Taiwan Silicon Shield gets stronger!

 

[Markwrob]

Are other test and packaging houses like Amkor also setting up new shops in the US? How about board manufacturers? Or will there still be haggling over country of origin even for the chips from these fabs?

 

[benb]

I wanted to clear this up for the forum. Above is a picture of an old processor core, an AMD Ryzen 7 3700X. Some things to notice about the markings on the outside of the package:
Diffused in USA (Global Foundries chip in the package)
Diffused in Taiwan (TSMC chip in the package)
Made in Malaysia (where the packaging and assembly occurred, sometimes called back-end)

So to answer Markwrob and many others, no, there is no haggling about where the value-added occurs, it's crystal clear.

Chips made in TSMC AZ will be marked Diffused in USA. If it is made in Taiwan, it'll say that. We will likely see overclockers compare the performance between Taiwan and USA fabs.

Diffusion denotes the front end of the fabrication process, with photolithography, CVD, PVD, CMP, Etch, and implant also (most likely) occurring. Yes, you could theoretically build a Diffusion-only fab in the USA, and locate all the other things in some other country and you'd be able to print Diffused in USA on the package and maybe avoid tariffs this way. But so far in this industry, that has never happened. Diffusion and all the other front-end processes are located in the same location. Once diffusion is complete, you've got yourself a semi-finished transistor or billion.

The front end of chip making is all the steps performed on a wafer before it is diced up into many individual pieces. The back end of chipmaking is the steps after dicing. Confusingly, there is also a backend to the frontend, which is where interconnect is formed just before dicing.

 

[Paul2]

View attachment 2863
I wanted to clear this up for the forum. Above is a picture of an old processor core, an AMD Ryzen 7 3700X. Some things to notice about the markings on the outside of the package:
Diffused in USA (Global Foundries chip in the package)
Diffused in Taiwan (TSMC chip in the package)
Made in Malaysia (where the packaging and assembly occurred, sometimes called back-end)

So to answer Markwrob and many others, no, there is no haggling about where the value-added occurs, it's crystal clear.

Chips made in TSMC AZ will be marked Diffused in USA. If it is made in Taiwan, it'll say that. We will likely see overclockers compare the performance between Taiwan and USA fabs.

Diffusion denotes the front end of the fabrication process, with photolithography, CVD, PVD, CMP, Etch, and implant also (most likely) occurring. Yes, you could theoretically build a Diffusion-only fab in the USA, and locate all the other things in some other country and you'd be able to print Diffused in USA on the package and maybe avoid tariffs this way. But so far in this industry, that has never happened. Diffusion and all the other front-end processes are located in the same location. Once diffusion is complete, you've got yourself a semi-finished transistor or billion.

The front end of chip making is all the steps performed on a wafer before it is diced up into many individual pieces. The back end of chipmaking is the steps after dicing. Confusingly, there is also a backend to the frontend, which is where interconnect is formed just before dicing.

Intel's "made in China" SKUs is what Chengtu packaging factory was built for.

PRC uses different definition for country of origin. They require a physical manufacturing process to undergo there, so just fusing is not enough.

This way they got 90% of Intel's chips physically going through their territory, with a non-trivially replaceable process.

 

[siliconbruh999]

Intel's "made in China" SKUs is what Chengtu packaging factory was built for.

PRC uses different definition for country of origin. They require a physical manufacturing process to undergo there, so just fusing is not enough.

This way they got 90% of Intel's chips physically going through their territory, with a non-trivially replaceable process.

but the wafer are still fabricated in US though

 

[lefty]

but the wafer are still fabricated in US though

Pretty much irrelevant, as the chips are mostly imported inside assembled products. It's almost impossible to enforce a tariff on a product that has a dozen different chips from several different countries.

 

[tonyget]

but the wafer are still fabricated in US though

More like in Ireland

 

[Barnsley]

Pretty much irrelevant, as the chips are mostly imported inside assembled products. It's almost impossible to enforce a tariff on a product that has a dozen different chips from several different countries.

Just put a tariff on anything imported into the US.

No differentiations

If it comes from somewhere else tariff it!

I wonder if its possisble to do for services as well as goods

 

[XYang2023]

https://twitter.com/x/status/1897359057759211799

 

[Mad2]

Trump knows how critical tsmc is to US fabless biz worth trillions (as well as critical to national defense in AI era), and tsmc played their hand beautifully with recent investment announcement.

Someone from intel needs to get the kneepads out and give Trump what he wants. Exceptions will be the rule and tariffs are going to be whatever Trump says (including Israel, Ireland, Chengdu. Malaysia). TSMC was brilliant in this and now looks like basically everything from tsmc will have zero tariff regardless of where it's fabbed/packaged. Very well played!

Intel needs to find a way to give Trump a big win then they should enjoy similar favorable treatment on their overseas activities.

 

[XYang2023]

Trump knows how critical tsmc is to US fabless biz worth trillions (as well as critical to national defense in AI era), and tsmc played their hand beautifully with recent investment announcement.

Someone from intel needs to get the kneepads out and give Trump what he wants. Exceptions will be the rule and tariffs are going to be whatever Trump says (including Israel, Ireland, Chengdu. Malaysia). TSMC was brilliant in this and now looks like basically everything from tsmc will have zero tariff regardless of where it's fabbed/packaged. Very well played!

Intel needs to find a way to give Trump a big win then they should enjoy similar favorable treatment on their overseas activities

There is no report saying TSMC is exempted from tariffs. If so, Intel should also be exempted given the amount investments in terms of BOTH fabs and R&D by Intel. Otherwise, it would be truely un-American.

https://twitter.com/x/status/1898227485491576903

 

[Paul2]

Trump knows how critical tsmc is to US fabless biz

I would argue that no one really knows, nor really cares, demonstrated by dozens of opposing contradictory statements over the last few years.

Simple sanity test: if anyone really cared, would they purposefully try to act against their own interest?

If they really cared for defence tech, it would just sound like: "we need a basic minimum self-sufficiency in RF IC, power electronics, motor drives, optoelectronic parts, and MEMS." Instead, we hear a complete mish mash.

If the don't know what they want, they likely don't really want that.

 

[Daniel Nenni]

I would argue that no one really knows, nor really cares, demonstrated by dozens of opposing contradictory statements over the last few years.

Simple sanity test: if anyone really cared, would they purposefully try to act against their own interest?

If they really cared for defence tech, it would just sound like: "we need a basic minimum self-sufficiency in RF IC, power electronics, motor drives, optoelectronic parts, and MEMS." Instead, we hear a complete mish mash.

If the don't know what they want, they likely don't really want that.

I think Apple, Nvidia, AMD Qualcomm, Broadcom, etc... have more political power than imagined. Their livelihood and modern life depend on TSMC and Taiwan.

 

[Paul2]

Their livelihood and modern life depend on TSMC and Taiwan.

The livelihood and modern life depend on much more than TSM and Taiwan, with developed countries now being in near complete dependence on imported goods, which cannot be manufactured in the West in near any capacity needed to sustain basic livelihood.

USA has seen its first "salt riots" in centuries not over the lack of Iphones, and laptops, but shortages of cheap clothing, toiler paper, spaghetti, and eggs.

In the event of US-PRC war, people will care more for where to get baby diapers, clothes, and spam than expensive electronic status symbols.

 

[Daniel Nenni]

The livelihood and modern life depend on much more than TSM and Taiwan, with developed countries now being in near complete dependence on imported goods, which cannot be manufactured in the West in near any capacity needed to sustain basic livelihood.

USA has seen its first "salt riots" in centuries not over the lack of Iphones, and laptops, but shortages of cheap clothing, toiler paper, spaghetti, and eggs.

In the event of US-PRC war, people will care more for where to get baby diapers, clothes, and spam than expensive electronic status symbols.

True because most people are day-to-day thinkers. Future thinkers, like myself, realize that semiconductors are the cornerstone to life, liberty and the pursuit of happiness.

I know quite a few people who have chickens in their backyards for fresh eggs. It was a trendy thing to do but now it is much more practical. We have always had a garden and fruit trees to teach our children and grandchildren where food really comes from. Like the whole chickens in the backyard thing, gardens might come into play as necessity, like victory gardens during WWI and WWII. After the toilet paper shortage we bought a bidet. As a native Californian we also have a 30 day food and water supply in case of earthquake.

American people have first world problems where third world countries do not have any food or clean water. American people will salt riot if we lose access to the internet, access to banking, or any supply chain disruption due to cyber attacks or AI malfeasance. That is what is keeping future thinkers up at night, not eggs. Just my semiconductor professional opinion of course.

 

[Paul2]

American people will salt riot if we lose access to the internet, access to banking, or any supply chain disruption due to cyber attacks or AI malfeasance.

These are the least likely things you will go to riot over. The 6 digit salary club is microscopic in comparison to how big is American life-on-food-stamps-and-xanax-abuse club.

Rome was not brought down by patricians, but by the enormous number of underfed, and angry Roman underclasses, which patricians created.

 

[Barnsley]

These are the least likely things you will go to riot over. The 6 digit salary club is microscopic in comparison to how big is American life-on-food-stamps-and-xanax-abuse club.

Rome was not brought down by patricians, but by the enormous number of underfed, and angry Roman underclasses, which patricians created.

Donny bringing the troops home , maybe can force folk to.riot to give the troops something to do