Taiwan Semiconductor Manufacturers (TSMC) has discovered they are at the heart of a complete storm. An unprecedented AI chip requires it to be unable to fully meet, escalating trade tensions that threaten its business model, and geopolitical risks expose the vulnerability of the global semiconductor supply chain.
At TSMC’s annual shareholders meeting at HSINCHU on Tuesday, CEO CC Wei offered a confident outlook for the semiconductor giant, saying “revenues and profits this year will set a new historic high.”
Bullish forecasts come when companies are tackling the indirect impact of US tariffs while struggling to meet unprecedented demand for AI applications.
The impact of tariffs remains manageable despite industry concerns
Wei is tackling growing concerns about the impact of President Donald Trump’s trade policy on the global chip industry, acknowledging that tariffs will affect TSMC, although not directly.
“Taxes will be imposed on importers, not exporters. TSMC is an exporter,” Wei explained to shareholders. “However, tariffs can cause prices to rise slightly, and demand can drop if prices rise.”
He stressed that the company’s position remains strong, although tariffs could be affected by TSMC’s business if it enforces prices and reduces overall chip demand. “Our business is still very good,” Wei said, “I’m not afraid of anything. I’m afraid of the global economy going down.”
Trump’s radical tariff policies create a great deal of uncertainty across the semiconductor sector. The administration initially imposed a 32% obligation on imports from Taiwan as part of a broader trade measure, but these were later suspended for 90 days, with semiconductors being specifically excluded from taxation.
AI applications drive unprecedented growth
Despite the trade policy headwinds, TSMC’s core business continues to benefit from the explosive growth of artificial intelligence applications. Wei emphasized that demand for AI chips remains “very strong” and consistently outperforms the company’s supply capacity.
“Our job is to give customers enough tips and we’re working hard on that. ‘Working hard’ means that it’s still not enough,” he told the meeting. The company’s customer roster includes Tech Giants Apple and Nvidia. Both are major drivers of AI-related semiconductor demand.
TSMC’s April sales highlight this robust demand, with the company reporting revenue of NT $349.6 billion ($11.6 billion), up 48.1% from the previous year and 22.2% from March.
Wei stressed that the underlying AI demand foundation remains very strong, partly due to the surge in semiconductor stockpiling ahead of the expected increase in tariffs.
Issues to expanding production capacity
The discrepancy between AI chip demand and available supply has been a critical challenge for TSMC. Wei has shown that while the company is actively working to “enhance production capacity to satisfy customers,” the scale of demand continues to put a burden on even the world’s most advanced semiconductor manufacturing capabilities.
This capacity constraint reflects the dynamics of a wider industry where AI applications, from data center processors to consumer devices, require increasingly sophisticated and powerful chips that only a few manufacturers can produce at scale.
Geopolitical pressures and expansion strategies
TSMC faces pressure to diversify its manufacturing footprint away from Taiwan, where the majority of its manufacturing plants are currently located. Beijing’s continued claims and use of force against Taiwan has raised concerns about supply chain resilience to critical semiconductor production.
Wei firmly denied reports that the TSMC is considering building a chip factory in the United Arab Emirates, addressing directly recent media speculations about the possibility of expansion in the Middle East. “I think the rumors really fly everywhere,” he said. Bloomberg A report cited by an unknown source.
The company has actively established a manufacturing presence in other regions, with facilities currently under development in the US, Europe and Japan. These expansion efforts aim to address both geopolitical risks and customer demands for geographically diversified supply chains.
Regulatory compliance and China relations
TSMC’s operations continue to navigate complex regulatory requirements across multiple jurisdictions. Wei has confirmed that we will work closely with both the law and the US government to ensure compliance with legal and regulatory requirements.
The company recently stopped shipping to China-based chip designer Sophgo after discovering that the chip matched components found in the AI processors of Huawei Technologies, a Chinese company subject to US government restrictions.
The incident highlights the ongoing challenges TSMC faces in balancing its commercial relationship with regulatory compliance.
Industry outlook and economic concerns
While TSMC’s short-term outlook appears robust, WEI acknowledged the broader economic risks that could affect the semiconductor industry. The executive’s comments that they fear economic decline over certain trade policies reflect the perception that global demand patterns ultimately drive industry fate.
The company’s record performance forecast suggests that the current trend in AI chip demand is strong enough to offset potential headwinds from trade policies or broader economic uncertainties. However, this growth sustainability could depend on the continued advancement of AI applications and the health of the global economy as a whole.
(Photo by TSMC)
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