What's Going On With Taiwan Semi Stock On Monday?

Zinger Key Points
  • TSMC boosts U.S. investment to $65B, plans 2-nanometer chip production in Arizona by 2030.
  • TSMC sets 60% local procurement goal in Japan, signaling major global expansion efforts.

Taiwan Semiconductor Manufacturing Co TSM continues to ride high with its geographical expansion buoyed by the artificial intelligence frenzy. 

It has committed to over 60% increase in its U.S. investment, raising the total to over $65 billion backed by a $6.6 billion U.S. federal grant.

This investment will enable the production of the world's most advanced 2-nanometer chips in the United States. 

U.S. Commerce Secretary Gina Raimondo announced that TSMC plans to construct an additional, third chip manufacturing facility in Phoenix, Arizona, slated to become operational by 2030. The project represents the largest foreign direct investment in U.S. history for a greenfield project, Nikkei Asia reports.

In addition to receiving a substantial federal grant, TSMC will benefit from $5 billion in loans and eligibility for an investment tax credit, covering up to 25% of capital expenditures. 

This expansion is supported by 14 suppliers who are set to build or enlarge their operations in Arizona or other U.S. locations, catering to TSMC's new fabrication plants.

Separately, TSMC has conveyed to Japan's Prime Minister Fumio Kishida its expectation to achieve 60% local procurement for its inaugural chip manufacturing facility in Japan by 2030. 

TSMC's CEO, C.C. Wei, shared this commitment during Kishida's visit to the company's Kumamoto plant as the key Nvidia Corp NVDA and Apple Inc AAPL supplier remains keen on its geographical footprint expansion.

According to TSMC Spokesman Nina Kao, this target primarily pertains to indirect materials involved in the manufacturing process, excluding machinery and components incorporated into the final products, Bloomberg reports.

Also Read: Nvidia to Benefit from SK Hynix's New $3.9B Indiana Facility Focused on High-Bandwidth Memory Chips

The Japanese government has committed substantial financial resources, allocating ¥476 billion ($3.1 billion) to establish TSMC's first factory, which was developed in collaboration with local entities, including Sony Group Corp. 

Moreover, the country pledged an additional ¥732 billion in subsidies to construct a second TSMC fabrication plant in the region.

TSMC's first Kumamoto facility is on track to commence the delivery of logic chips aimed at camera sensors and automotive applications by the end of the year. 

Last week, TSMC kept its annual revenue forecasts unchanged despite the severe earthquake on April 3, dispelling fears of a potential disruption in the global semiconductor supply chain

The company reaffirmed its expectation for full-year revenue growth in the low-to-mid twenties percentage range, a projection initially shared during the January institutional investors' conference, Reuters reports. 

This statement comes in the wake of the largest earthquake to strike Taiwan in at least 25 years, which raised concerns about the stability of the global chip supply. 

TSMC stock gained 59% in the last 12 months. Investors can gain exposure to the stock via VanEck Semiconductor ETF SMH and IShares Semiconductor ETF SOXX.

Price Action: TSM shares traded higher by 1.09% at $142.90 premarket on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by Jack Hong via Shutterstock

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