TSMC stock drops sharply despite record profit and $100B U.S. pledge

Taiwan Semiconductor Manufacturing Co. ↗ 6.33% on Thursday pledged an additional $100 billion investment in its Arizona operations, raising its total US commitment to $265 billion, as the world's largest contract chipmaker reported record second-quarter earnings powered by surging demand for artificial intelligence chips.

Record Profits, Elevated Spending

TSMC's net income for the April-to-June quarter surged 77.4% year-over-year to a record T$706.6 billion ($22 billion), far exceeding Bloomberg consensus estimates of T$623.7 billion. Revenue reached $40.2 billion, at the high end of the company's guidance and up 36% from a year earlier. Gross margins expanded to 67.7%, beating the top of the company's projected range.investing+5

The company raised its full-year revenue growth guidance to above 40% and lifted its 2026 capital expenditure forecast to $60 billion to $64 billion, at least $4 billion above its prior projection of $52 billion to $56 billion. The capex increase spooked investors — TSMC shares listed in Taipei fell 7.29% on Friday to close at T$2,290, their steepest single-day drop in months, after the company warned that the rapid ramp-up of its 2-nanometer process could weigh on near-term margins.taiwannews+2

$265 Billion Arizona Commitment

Chairman and CEO C.C. Wei announced during the earnings conference that TSMC would invest an additional $100 billion in the US, funding at least four new fabrication plants producing chips at the 2-nanometer node and below, along with advanced packaging facilities. The new fabs will be built on a 900-acre site the company acquired earlier this year, according to The New York Times.12news+2

The Trump administration confirmed the deal, which brings TSMC's total announced US investment to $265 billion — described as the largest foreign direct investment in American history. The commitment builds on $165 billion previously pledged under agreements that began during the Biden administration.ktar+2

Demand Outpaces Supply

Wei has repeatedly warned that global chip supply will fall short of AI-fueled demand for years, a message he reiterated at the company's annual shareholder meeting in June. The view underpins TSMC's willingness to spend aggressively despite investor unease over elevated capital outlays.bloomberg+1

The earnings report triggered a broader sell-off in semiconductor stocks across Asian markets on Friday. Nvidia ↗ 2.78% and Apple ↘ 0.52%, two of TSMC's largest customers, rely heavily on the Taiwanese firm's advanced manufacturing capabilities — a dynamic that makes TSMC's capacity expansion plans a bellwether for the AI infrastructure buildout.businesstimes+2