TSMC is still affected by the uncertainty of tariffs! CFO Huang Ren-Chao: We will rely on controllable factors to maintain a gross margin above 53%.

Taiwan Semiconductor Manufacturing Company ( TSMC) CFO Huang Renzhao was invited for an interview with Bloomberg on July 18, where he emphasized that strong AI demand is driving the growth forecast for the entire year. However, capital expenditures will continue to be approached with caution due to uncertainties in the overall economy and tariffs. When discussing the previous plan to expand factories in the U.S., he mentioned that the second phase of the factory construction plan has started two years ahead of schedule, but the tax incentives provided by the U.S. are still of limited help.

AI demand is extremely high, with the annual growth forecast directly raised to 30%.

Huang Renzhao first discussed the key points of the financial report, stating:

"We see that the demand for AI remains strong, which is the main reason for the upward revision of the annual growth forecast to 30%. In addition, TSMC's advanced manufacturing technology continues to lead significantly, and the scale of the platform is also expanding continuously, all of which are key factors supporting growth."

Why raise the growth forecast but not increase capital expenditure?

However, since TSMC has raised its performance forecast and is optimistic, why hasn't capital expenditure increased? In this regard, Huang Renzhao explained:

"Although TSMC is optimistic about the demand for AI and other sectors, it will not recklessly increase its investment due to short-term impressive performance. It will first observe international situations and policy changes to avoid risks. However, we are also very aware that the influence of the current macro environment and the uncertainty of tariff policies still exist, so we will carefully evaluate capacity planning."

The year-on-year growth rate reached as high as 95% in the past two seasons. How long can such spending last?

With an average annual growth rate of 95% over the past two seasons, the current capital expenditure is set at $38 billion to $42 billion. Will the annual growth rate increase again next year, and can such high expenditures be sustained? In response, Huang Renzhao stated:

"It's too early to talk about next year. Given TSMC's scale, capital expenditures are unlikely to suddenly drop significantly in the short term. If new business opportunities arise in the future, we will still invest."

The U.S. factory construction plan has been advanced, and the tax credits provide limited short-term assistance.

Speaking about the expansion plans in the United States, Huang Renzhao mentioned:

"The second-phase construction plan in the U.S. has been expedited by 7 quarters, nearly two years, but this will not significantly increase capital expenditure."

The host pressed for the tax credit (Investment Tax Credit, ITC)'s assistance, and the gross margin will be diluted in the coming years. How much can the tax credit make up for it? Huang Renzhao stated:

"Tax credits will still be helpful in the next five years, but the short-term effect is not significant because depreciation is reflected gradually. Currently, several factors will affect profitability, and exchange rates are part of what we cannot control, but we will rely on other controllable factors to maintain a gross margin target of over 53%."

The growth forecast for the fourth quarter is conservative, but we will actively seize new business opportunities in the future.

Although the growth in the first half of the year exceeded expectations and the outlook for the third quarter is also strong, the full-year growth estimate remains at 30%. Huang Ren-Zhao explained:

"The main reason is the macroeconomic uncertainties, so we take a more conservative approach. However, if there are really new business opportunities, TSMC still has the capability to seize them."

This article states that TSMC is still affected by the uncertainty of tariffs! CFO Huang Renzhao: We will rely on controllable factors to maintain a gross margin of over 53%. First appeared in Chain News ABMedia.