By Adam Clark

Taiwan Semiconductor Manufacturing might be ready to invest $100 billion in the U.S. but that doesn't mean it is ready to bring all of its technology to American shores.

That could be good news for Intel's own chip-manufacturing hopes.

TSMC will build three new chip plants, two chip-packaging plants and a research and development center in the U.S., Chief Executive C.C. Wei said during a White House appearance with President Donald Trump on Monday.

It's a major commitment on top of the $65 billion that the Taiwanese chip manufacturer has already pledged in American investment. However, TSMC's "most advanced" processes will remain in Taiwan, a spokesperson for the Taiwanese Presidential Office said on Tuesday, according to Reuters.

It isn't clear what processes the spokesperson was referring to. TSMC has already said it intends to manufacture chips using its newest 2-nanometer process in Arizona as early as 2028. However, that is several years behind its timeline for 2nm production in Taiwan.

That raises the prospect that TSMC will still face potential tariffs on some of its future work for U.S. businesses. It is the main supplier for chips for Nvidia, which leads the market for semiconductors used for artificial intelligence applications. TSMC also makes the core processors inside Apple iPhones, Qualcomm mobile chipsets, and processors made by Advanced Micro Devices.

Trump suggested he was still considering imposing tariffs on chips produced outside of the U.S. and it wasn't clear if TSMC would receive a waiver on such levies.

"If they did [the chips] in Taiwan to send them here they'll have 25% or 30% or 50% or whatever the number may be" in tariffs, Trump said. "It will go only up. By doing it here, there's no tariffs."

TSMC shares dropped 2% in local trading in Taiwan on Tuesday, although its American depositary receipts were gaining 1.4% in the premarket.

"U. S. 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%," wrote Ming-Chi Kuo, a Taiwan-based analyst for TF International Securities, in a research note on Tuesday.

TSMC's commitment could reduce the chances of it acting on its reported interest in taking a stake in Intel's struggling foundry business or buying the division outright. Such a move would already be controversial as Intel hopes to retake the lead in chip-manufacturing technology from TSMC with the coming launch of its 18A process, which is reportedly being tested by Nvidia and Broadcom.

However, Intel is still facing considerable challenges in chip manufacturing. The latest setback is the delay to the opening of two Ohio chip-fabrication facilities. The company now expects it will begin operations in those locations in 2030 or 2031, after completing the first fab in 2030. The Wall Street Journal reported that Intel once was targeting a 2025 completion.

Intel shares were falling 1.6% in premarket trading on Tuesday.

Write to Adam Clark at adam.clark@barrons.com

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March 04, 2025 08:08 ET (13:08 GMT)

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