TSMC's US Chip Production Costs May Be 50% Higher Than Taiwan, Margin Pressure Emerges

According to CNBC on Wednesday (July 22), advanced chip production costs at Taiwan Semiconductor Manufacturing Company (TSMC) in the United States may be 20-50% higher than in Taiwan, according to analyst estimates. TSMC has committed to investing $200 billion in the US, including $100 billion announced last week, following pressure from US tariff threats to companies not producing advanced semiconductors domestically.

TSMC's chief financial officer Yellow Huang warned that overseas fabs will continue diluting gross margins, with initial impact reducing margins by 2-3 percentage points and potentially expanding to 3-4 percentage points as capacity ramps in coming years. The company posted Q2 gross margins of 67.7%, but rising US production costs pose headwinds to profitability growth.