TSMC expansion risks into US

Just Do It
2023-01-09

The semiconductor industry is driven by supply and demand, and technology is a key factor that differentiates companies within the industry. Margins for these companies can fluctuate significantly due to competition and cyclicality. Taiwan Semiconductor $Taiwan Semiconductor Manufacturing(TSM)$  (TSMC) has consistently remained profitable, even as other companies in the industry see declining margins.

TSMC is considered especially valuable because it produces over 90% of the world's most advanced chips. This has led to tension between China and the US over control of TSMC, and has also attracted the attention of investor Warren Buffett, whose company Berkshire Hathaway recently acquired a stake in TSMC. Apple, in which Buffett owns a large stake, relies on TSMC to manufacture its chips.

TSMC is also expanding its production to the US with the construction of two chip manufacturing plants in Arizona. However, there are concerns about the cost and potential challenges of these plants. Despite the current market correction for semiconductor stocks, it is expected that TSMC will see returns of 12% per year in the coming decade.

TSMC's expansion into the US through the construction of chip manufacturing plants in Arizona is a risky move, but one that could pay off in the long run. The main concern with these plants is their cost, as they are expected to cost billions of dollars to build. Additionally, there are potential challenges to be faced, such as the need to hire and train a skilled workforce, and the potential for delays due to regulatory hurdles.

However, the benefits of having a presence in the US could outweigh these challenges. For one, it allows TSMC to be closer to its customers, particularly in the tech and defense industries. It also helps to mitigate the risk of relying on a single location for production. The US is also home to some of the world's leading research and development centers, which could give TSMC access to new technologies and ideas.

Overall, while the expansion into the US carries some risks, it could be a strategic move that helps TSMC maintain its competitive advantage and profitability in the long term.

@CaptainTiger @TigerStars @MillionaireTiger 

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