TSMC to invest another $100 billion in US as Q2 profit blows past forecasts

By Wen-Yee Lee, Ben Blanchard and Faith Hung

TAIPEI, July 16 (Reuters) – TSMC, the world’s leading maker of advanced AI chips and a major supplier to Nvidia, pledged on Thursday to invest another $100 billion to win over President Donald Trump as he pushes for more chip production in the U.S. state of Arizona.

Taiwan Semiconductor Manufacturing Co. <2330.TW>boosted its capital spending forecast for this year by as much as 14%, reinforcing its bullish view on AI demand.

“Our clients and customers (mostly cloud service providers) continue to provide us with very strong signals and positive outlooks,” the company’s CEO, CC Wei, said at an earnings conference call.

“Therefore, our belief in the multi-year AI megatrend remains very high.”

The optimistic outlook comes after TSMC, a pioneer in AI chip demand, posted its ninth consecutive quarter of double-digit percentage growth with a 77% jump in second-quarter profit to a record high of T$706.6 billion ($22 billion), beating market forecasts of T$632.6 billion.

In a key indicator of management’s confidence in the durability of AI demand, capital spending for 2026 is forecast to be between $60 billion and $64 billion, compared to the previous forecast for the upper end of $52 billion to $56 billion.

The company also said capital expenditures over the next three years will be “much higher” than the past three years.

Amid growing demand for advanced chips used in AI applications, TSMC’s additional $100 billion investment in Arizona will add to previously announced $165 billion investments to build chip factories there.

The investment comes amid Trump’s persistent accusations that Taiwan is stealing American semiconductor business. He said that when he leaves office, the United States will have 50% of the world’s semiconductor manufacturing capacity.

“We believe this investment will help further support the development of the U.S. semiconductor ecosystem, strengthen the supply chain, and support the growing number of high-tech, high-wage jobs in the United States,” Wei said.

He added that four more facilities, including advanced packaging, will likely be built in Arizona in addition to the eight already built or planned, but the timeline for additional facilities will depend on “market conditions.”

In a separate announcement Thursday, the U.S. Department of Commerce said TSMC’s additional investment “underscores the Trump Administration’s commitment to strengthening domestic manufacturing and U.S. technological leadership through strategic partnerships and investment.”

The investment will help solidify the bilateral trade agreement signed between the United States and the United States. Nick Marro, Asia’s chief economist and director of global trade for the Economist Intelligence Unit, who has seen U.S. tariffs lowered and Taiwan’s commitment to increase investment, said earlier this year that Taiwan was also instrumental in this regard.

TSMC’s aggressive capital spending and rising profit margins have made it a barometer of demand in the global semiconductor industry.

The company expects full-year revenue in U.S. dollars to grow just over 40% for 2026, compared to the previous forecast of over 30%. Sales for the current quarter are projected to be between $44.6 billion and $45.8 billion, up from $33.1 billion a year ago.

Wei said TSMC has been “very aggressive” in forecasting demand for all its customers, but added that simply adding up its forecasts would overstate actual market demand.

“I believe they did their best to tell me the truth,” he said, adding that TSMC also did its own analysis of AI data center construction and broader demand trends before deciding to expand capacity to avoid creating chips that end up in inventory.

In the AI ​​market, Wei also said that the emergence of AI has led to a revival of the role of CPUs in AI data centers, which has increased the demand for more silicon as well as AI chip consumption.

Demand for TSMC’s 3-nanometer and 2-nanometer process technologies for AI chips, as well as its advanced chip packaging technology CoWoS, remains strong, analysts said.

This has taken Asia’s most valuable company, which is also a major supplier to Apple, to new heights. Its market capitalization is currently around $1.97 trillion, almost twice that of South Korean rival Samsung Electronics.

On Monday, the company announced a 36% increase in second-quarter revenue, above market estimates and a record high.

In related news, Dutch company ASML on Wednesday, the world’s leading supplier of equipment for making high-tech computer chips, raised its 2026 sales forecasts and promised a capacity increase that could ease fears that a production bottleneck could slow the artificial intelligence boom.

Wei said TSMC is working closely with ASML, and whether the company will adopt its next-generation equipment will depend on when it demonstrates sufficient technological capacity in production and cost effectiveness.

TSMC’s Taipei-listed shares have gained 59% so far this year, largely in line with the broader market.

($1 = 32.1340 Taiwan dollars)

(Reporting by Wen-Yee Lee, Ben Blanchard and Faith Hung; Editing by Christian Schmollinger)