President Donald Trump’s push to manufacture advanced semiconductors inside the United States is squeezing profit margins at Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, CNBC reported July 22. TSMC has announced $200B in US investment commitments since Trump returned to office in 2025, including a $100B package of new Arizona fabs and packaging facilities unveiled last week.
The aggressive US expansion exposes TSMC to significantly higher production costs. Morningstar analyst Phelix Lee estimates that chips manufactured in the US cost 20% to 50% more than those produced in Taiwan, depending on subsidy timing and tax credit recognition. CFO Wendell Huang said overseas fab projects will dilute gross margins by 2 to 4 percentage points over the next several years as they ramp up.
TSMC posted a 77.4% jump in second-quarter profit on July 16, with gross margin reaching 67.7%. The company can absorb the margin compression from its current position of strength, but the long-term trajectory depends on how quickly the Arizona fabs reach volume production and how much of the added cost gets passed to customers.
A White House spokesperson told CNBC that “trillions of dollars in investments by TSMC and other semiconductor companies are a result of President Trump’s trade and economic policy.” Customers are already bracing for higher chip prices from American-made wafers, with TSMC’s leading-edge pricing on US-produced silicon expected to carry a substantial premium.
