TSMC Accelerates Arizona Factory Capacity Amid Surging AI Demand

TSMC is racing to accelerate capacity at its Arizona factory as the company continues to see a "multi-year demand mega trend" from its customers, Chief Financial Officer Wendell Huang told CNBC.

TSMC, or Taiwan Semiconductor Manufacturing Co., is scaling up its mega investment in Arizona by committing an additional $100 billion to aggressively expand its U.S. chipmaking footprint amid a surging multi-year structural demand for AI.

The fresh commitment raises TSMC's total investment pipeline in Arizona to $265 billion, underscoring a massive AI-driven capacity build-out that also fueled an upward revision to the company's full-year capital expenditure to between $60 billion and $64 billion.

Speaking in an interview with CNBC's Emily Tan, TSMC's Huang said the fresh investment comes on the back of robust customer demand in the U.S. market and strong government support.

"We're seeing this strong-structure, multi-year demand, and we do not plan to leave any food on the table for anybody else," Huang told CNBC. "As long as the megatrend is right, then we're able to continue to deliver the profitable growth to our shareholders," he said.

Surging demand

In order to meet surging customer demand, TSMC is aggressively optimizing its leading-edge capacities, including a fast conversion of its 5-nanometer capacity to the advanced 3-nanometer node to support customers, Huang said.

The nanometer figure refers to the size of each individual transistor on a chip. The smaller the transistor, the more of them can be packed onto a single semiconductor. Typically, a reduction in nanometer size can yield more powerful and efficient chips.

When it comes to TSMC's U.S. expansion, phase one, using 4-nanometer technology, is already up and running, the CFO told CNBC.

"It's going to be bigger and bigger in the next few quarters," Huang said, framing the 2-nanometer technology as the company's newest revenue driver heading into the third quarter, following its initial revenue generation in the second quarter.

U.S. fab construction costs are four to five times higher than in Taiwan, however, Huang said that while the initial dilution will widen as the scale of overseas operations grows, the expansion will ultimately further foster the development of the U.S. semiconductor ecosystem.

"It will be both the front-end wafer fabs and back end advanced packaging fabs," Huang said regarding the deployment of the fresh $100 billion investment.

Ahead of the earnings release, the company ended Thursday's session up 1.23%, yet it reversed course on Friday to close down 7.29%. The stock is up around 48% year-to-date.

Responding to the company's share price performance, Huang said TSMC does not have any control over the financial markets. "What we can do is really to focus on fundamentals of our business," he said, adding that while the sector faces hefty price increases in components, the company sees minimal impact due to its strategic focus on the high-end market.

Aside from market factors, TSMC is also managing its regulatory footprint. On China, Huang said that TSMC continues to comply with all export controls while serving its Chinese customers, who contribute about 8% of total revenue.

The chipmaker is expanding its focus toward future expansion drivers. Regarding the prospects of physical AI, he added that the company's recent joint venture with Sony for image sensors is part of its strategic commitment to supporting long-term customer growth in specialty technologies.