To The Moon

As $Taiwan Semiconductor Manufacturing(TSM)$ announces a $100 billion investment in its U.S. plant, Ming-Chi Kuo comment:

Investment Highlights:

1. The investment program has been partially adjusted

   • Total investment increased by 100 billion U.S. dollars, the implementation details remain flexible, but also to eat through Trump's "love of face" and "shouting slogans" characteristics;

   • Changes in factory layout: reduce one advanced process fab, add one advanced packaging plant, and set up more R&D centers to strengthen technological competitiveness.

2. Strategic cooperation rather than relocation

   • Technology dependence status quo: U.S. factories only cover 5-7% of global production capacity, still need to rely on technical support from Taiwan headquarters.

   • Long-term collaboration mode is also the U.S. factory relies on Taiwan technical team remote support system, of course, whether this will continue to be chased by the Trump administration to be observed.

3. The U.S. government's strategic intent may not be realized

   • On the contrary, it enhances the competitiveness of the U.S.: to enhance the localized production capacity of the whole process of AI chips.

   • Reverse siphoning of talents: attracting top talents from $Intel(INTC)$ $IBM(IBM)$ $AMD(AMD)$ etc. through the R&D center.

4. Impact on business operations: short short long long

   • Profit margins: 30-35% gross margins at U.S. plants, overall gross margins may drop 1.5-2% after full operation

   • Supply Chain Adjustment: Ask existing suppliers to reduce prices, while introducing new suppliers to create investment opportunities

   • Global investment rebalancing: may scale back investment plans for other new overseas plants in Germany, Japan, etc., and cancel the pre-proposed acquisition of Chun Chuang's factories

   • Short-term pressure on the market to overreact to concerns about large investments.

   • Long-term pressure to maintain advanced process technology leadership, respond to market demand fluctuations, and reduce tariff pressure and antitrust scrutiny