TSMC Posts Record Profit, Warns Its $165 Billion U.S. Buildout Is Cutting Into Margins

TSMC just had one of the best quarters in its history. The good times come with a built-in cost, and that cost is called Arizona.

The Taiwanese chipmaker, which builds the advanced processors inside nearly every AI system on the planet, reported second-quarter profit of T$706.6 billion (about $22 billion), up 77.4% year over year, according to Reuters. That beat analyst forecasts of T$632.6 billion and marked TSMC's ninth straight quarter of double-digit growth, Reuters reported. Revenue hit $40.2 billion, up 33.7% from a year earlier, according to TECHi.

Business is booming. TSMC's CFO Wendell Huang told analysts on the earnings call that margins will keep getting squeezed for "several years" as the company's U.S. factories ramp up, according to CNBC. The margin squeeze is already happening.

The Arizona Math

TSMC announced last week it's adding another $100 billion to its U.S. commitments, on top of $165 billion already pledged, bringing the total to $265 billion, according to Reuters. CEO C.C. Wei said the company plans to build a total of 12 fabrication and packaging facilities in Arizona, plus an R&D center, according to Reuters.

It's a massive bet on American soil and a much more expensive one. Morningstar senior equity analyst Phelix Lee told CNBC that TSMC's U.S.-made chips will cost 20% to 50% more than the same chips made in Taiwan, depending on subsidy timing and tax credits. Lee said he expects TSMC to pass most of that extra cost onto customers rather than eat it themselves.

That shift is already in motion. Nikkei reported on July 21 that TSMC plans to raise prices on both advanced and mature chips by up to 10% in 2027. TSMC declined to comment on pricing specifics to CNBC.

Why Trump Gets Credit, and Why That's Not the Whole Story

Commerce Secretary Howard Lutnick was blunt about who he thinks deserves credit. "President Trump's leadership is driving companies to invest in American manufacturing," Lutnick said in a statement to CNBC, calling the $100 billion announcement proof that advanced semiconductor manufacturing is coming back to America.

A White House spokesperson made a similar case to CNBC, tying the investment directly to "a historic trade deal with Taiwan" and renegotiated CHIPS Act terms.

Trump has repeatedly accused Taiwan of "stealing" American semiconductor business and has said he wants the U.S. controlling half the world's chip manufacturing capacity by the time he leaves office, according to Reuters. TSMC's chec