TSMC, which is at the center of the storm, is both happy and sad. Trump, the Republican presidential candidate in the United States, complained that Taiwan, China, had taken away the chip business and asked Taiwan, China, to pay protection fees. When asked about this at the legal conference, TSMC Chairman and President Wei Zhejia said that it would not change due to Trump's relevant remarks. TSMC will continue to expand its overseas factories, including Arizona, Japan, Kumamoto, and future European factories, all according to plan. In addition, it will strengthen communication with the United States and reiterate that it will continue to promote cutting-edge semiconductor manufacturing technology to maintain a strong competitive advantage. Well-known analyst Xie Jinhe posted on Facebook that this time Trump asked Taiwan, China to pay protection fees, and pointed out that TSMC made so much money, which once again increased regional risks. This Thursday, TSMC's legal conference will hand in a good second quarter report, which will also stabilize TSMC's stock price. However, as more and more Taiwanese companies go global, they will face more risks. Xie Jinhe mentioned that in the past, many business people liked to say: When two elephants fight, don't take sides! Gradually, everyone discovered that we don’t even have the freedom to not choose sides. What’s more frightening is that once we choose the wrong side, the cost will be even greater. Xie Jinhe believes that in the past, many people thought they could avoid risks by closing their eyes. Now, TSMC has hired analysts at high salaries. This time, the Trump effect may increase the intensity in this regard. TSMC accelerates the pace of building factories in the United StatesTrump's call to return to the White House is high, and the market expects TSMC's pace of building a factory in the United States to accelerate, which is expected to drive TSMC's supply chain, including the first wave of factory-related plant system factories such as Han Tang, Fan Xuan, and semiconductor equipment and consumables related suppliers such as Jia Deng, Zhong Sha, Chong Yue, and Global Crystal, etc. are expected to benefit.
Previously, TSMC had announced that it would further expand its investment in Phoenix, Arizona, and build three new wafer factories, with a total capital expenditure of more than $65 billion. Currently, the first wafer factory has not yet been put into production. Market legal persons expect that after the U.S. election in November this year, if Trump wins, TSMC's pace of building in the United States may accelerate, which will also drive a wave of demand for related supply chains to build factories in the United States.
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TSMC's first wafer factory in the United States is expected to start mass production of 4nm processes in the first half of 2025 according to the schedule, and has planned to build the second and third factories in the United States in succession. The market is optimistic that TSMC's expansion of factories in the United States is a major plus for the supply chain of plant engineering, cleanroom engineering, consumables, testing, masks, and semiconductor process equipment. Among them, the plant system is the pioneer of the first batch of expansion, and Han Tang and Fan Xuan are the two major focuses.
Han Tang is the largest general contractor for TSMC's new factory construction project in Arizona, USA. As a supplier of cleanroom engineering, Han Tang also benefits from TSMC's investment in building factories and expanding production in Taiwan, China, and the United States. Han Tang's revenue last year reached 68.889 billion New Taiwan dollars, with a year-on-year increase of 42.92%, setting a historical high. The main driving force is the construction of factories in the United States. This year, due to the peak of the U.S. account receivable has passed and slowed down. If TSMC accelerates the construction and expansion in the future, the company will benefit again.
Fan Xuan has undertaken the water and gas engineering orders of TSMC's new factory in the United States and has been recognized and accounted for in succession, becoming one of the important driving forces for the growth of performance in 2023. The company's revenue last year was also a historical high. The market expects that TSMC's second and third new factories in the United States, the company is also expected to benefit.
In addition, Jia Deng, a major manufacturer of wafer transmission solutions, has joined hands with nine manufacturers in the Taiwan region of China to form a local semiconductor alliance, and has established the "Dexin Semiconductor Holdings" company through the alliance, fully building the semiconductor supply chain in the United States. In the future, as TSMC expands its layout in the United States, Jia Deng and other supply chains will also expand their operations.
In addition, the main suppliers of testing and regenerative wafers, diamond discs, Zhong Sha, silicon wafer factory Global Crystal, and consumable suppliers Chong Yue will all benefit from the demand for TSMC's factory construction in the United States.
Wei Zhijia faces seven major challenges
TSMC changed its new leader on June 4, and the stock price took off like a jet, from 839 yuan to 1055 yuan on July 16, a surge of 25.74%, before braking. As the largest weighted stock in Taiwan's stock market, TSMC has joined the club of high-priced stocks of over 1,000 yuan, and its market value has also increased to 27.36 trillion yuan.Wei Zhejia, in a press conference after the shareholders' meeting on June 4, proactively stated that since Nvidia, with a gross margin of over 70%, is valuable for its price, TSMC (Taiwan Semiconductor Manufacturing Company) also needs to showcase its value.
The value of TSMC has been further highlighted in the recent U.S. presidential election campaign. The U.S. presidential candidate Trump claimed that the Taiwan region has taken away about 100% of the chip business from the United States and threatened to demand protection fees. This statement has shaken the market. How to deal with the extortion of political strongmen in the future will be the first major challenge for Wei Zhejia.
The second major challenge for Wei Zhejia is to maintain a technological lead. Whether it is in mobile phones, computers, or AI, those who need leading technology will turn to TSMC.
Samsung and Intel are also eyeing the market. With the evolution of Moore's Law, transistors are becoming smaller, denser, and the number of stacked layers is increasing. Samsung and Intel are competing to push solutions that will challenge TSMC's leading position in technology.
Another revenue weapon for TSMC is the advanced packaging technology CoWoS (Chip on Wafer on Substrate). The demand for CoWoS capacity is far exceeding supply, and it is expected to ease by the end of 2025. The key bottleneck in the emergence of CoWoS lies in the middle layer, as the process of silicon through-hole in the middle layer is complex, and the expansion of capacity requires more high-precision equipment. However, the delivery period for high-precision equipment is long, and existing equipment also needs regular cleaning and inspection, leading to a supply shortage. How to increase the capacity of CoWoS to meet the needs of AI chip manufacturers is the third major challenge for Wei Zhejia.
TSMC is actively expanding its overseas factories, increasing production costs such as factory construction, labor, and electricity fees, coupled with insufficient economies of scale and the lack of an established ecosystem, which may impact TSMC's future profitability. In addition, how to attract international talent, enhance cross-border management capabilities, and cultivate the next generation of successors, all these seven major challenges test the wisdom of Wei Zhejia.
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