Taiwan Semiconductor Chief Skips Trump Inauguration, Describes U.S. Sanctions as 'Manageable'

The head of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSM), C.C. Wei, has chosen to take a step back by not attending President-elect Donald Trump’s inauguration. Reports from Bloomberg indicate that Wei also decided against making donations to Trump’s campaign.

The inauguration committee for Trump managed to raise over $170 million for the January events, with contributions from notable donors like Meta Platforms Inc, Microsoft Corp, Amazon.com Inc, Alphabet Inc (Google), and Apple Inc.

Prominent leaders from major tech companies such as Tim Cook from Apple, Jeff Bezos from Amazon, and Elon Musk from Tesla Inc are set to attend the inauguration on January 20.

Challenges in Semiconductor Manufacturing

Wei has pointed out several challenges facing Taiwan Semiconductor, including a shortage of skilled workers, gaps in the supply chain, and strict construction regulations for their new factory project in Arizona. According to reports from Reuters, the construction of this facility is progressing slower than expected.

He mentioned that the U.S. plant might not obtain the latest chip technology as soon as manufacturing facilities in Taiwan due to issues surrounding compliance and other construction regulations. Comparing the time required for building the Arizona factory to that of Taiwan’s plants, Wei noted that the U.S. process takes significantly longer—at least double the amount of time.

Previously, the company has stated that most of its advanced chip manufacturing would continue to be based in Taiwan.

Political Context and Market Impacts

During Trump’s presidential campaigns, he had criticized Taiwan, accusing it of undermining the U.S. chip industry. He also threatened to impose tariffs on Taiwanese chips and raised concerns about the absence of a formal defense treaty between the U.S. and Taiwan.

As the Trump administration approaches, the Biden administration had already implemented a series of artificial intelligence technology sanctions targeting countries like China and Russia, aiming to curb their military capabilities.

China represents a vital market for companies like Taiwan Semiconductor. The U.S. is keen to retain its supremacy in the semiconductor industry, working closely with allies such as Taiwan, the Netherlands (home to ASML Holding), and South Korea (home to Samsung Electronics).

Sanctions View and Company Growth

When discussing the impact of semiconductor sanctions, Wei expressed that he considers them to be "manageable" and does not foresee major effects on sectors outside of AI technologies, including automotive and crypto-mining sectors.

Recently, Taiwan Semiconductor reported fourth-quarter revenue of $26.88 billion (NT$868.46 billion), marking a 38.8% increase and surpassing the consensus estimate of $26.28 billion. With heightened demand for its 3-nm and 5-nm technologies, the company’s gross margins grew by 600 basis points to 59%.

Looking ahead, Taiwan Semiconductor anticipates first-quarter 2025 revenue ranging between $25 billion and $25.8 billion, in contrast to a consensus of $24.97 billion. The company forecasts a gross margin of approximately 57% to 59% and has committed between $38 billion and $42 billion to capital expenditures for fiscal 2025, up from last year's $29.8 billion.

During the earnings call, Wei expressed confidence in maintaining the quality of chip production in Arizona comparable to that in Taiwan and a smooth ramp-up of operations.

In the past year, Taiwan Semiconductor’s stock surged by an impressive 109%. Investors interested in semiconductor manufacturing can gain exposure through exchange-traded funds (ETFs) like VanEck Semiconductor ETF and iShares Semiconductor ETF.

Stock Performance: At the last check on Friday, TSM stock recorded a slight increase of 0.20%, trading at $215.21 during pre-market hours.

Conclusion

As the semiconductor industry faces new challenges and opportunities amid shifting political landscapes and market dynamics, Taiwan Semiconductor continues to focus on maintaining its production capabilities and navigating the complexities of U.S. sanctions.

Taiwan, Semiconductors, TSM