Taiwan Semiconductor Manufacturing plans to invest an additional $100 billion in the U.S. after reporting another strong quarter of profit and revenue growth. However, the stock dropped early Thursday as investors considered the size of this new spending.
The Taiwanese chipmaker reported a second-quarter net profit of NT$706.56 billion ($21.94 billion), which is 77% higher than a year ago and above the NT$626.82 billion analysts expected, according to FactSet. Quarterly revenue reached NT$1.27 trillion, up 36% from last year, or $40.20 billion in U.S. dollars, a 34% increase.
TSMC now expects its full-year revenue to grow by more than 40%, up from its earlier forecast of over 30%. Before the report, Jefferies analysts predicted the company might raise its outlook to between 30% and 35%.
TSMC is still the main chip supplier for Nvidia, a leader in AI semiconductors, and also makes key processors for Apple’s iPhones, Qualcomm’s mobile chips, and AMD’s processors. To meet rising demand, the company announced Thursday it will invest another $100 billion in new factories in Arizona. This brings its total U.S. investment commitment to $265 billion, up from its previous pledge of $165 billion, which included three new chip plants.
The company also increased its capital spending forecast for the year to between $60 billion and $64 billion, which is about 7% to 14% higher. Investors seem cautious about this higher spending and want to know if U.S.-made chips can reach the same profit margins as those made in Taiwan. TSMC’s American depositary receipts dropped 5% in premarket trading Thursday.
TSMC is also facing more competition from Intel, which has received U.S. government support to expand its own manufacturing. Intel now outsources about 30% of its wafer production to TSMC, but is also increasing its own capacity and developing new products. Intel is trying to attract major customers to its own foundry services.
