Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) 2025Q1 conference call: 30% of future 2 nanometer production capacity will be located in Arizona.

In the first quarter of 2025 earnings call, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) pointed out that the expansion in Arizona, USA is at the request of customers such as Apple Inc., NVIDIA Corporation, AMD, Qualcomm, and Broadcom Inc. due to strong AI demand. The company has communicated with the US government in hopes of obtaining the necessary permits to start construction of the factory. It is expected that about 30% of the 2-nanometer capacity will be located in Arizona, forming an independent advanced semiconductor manufacturing cluster. Currently, the plan is to build 6 wafer fabs in Arizona, with the 2-nanometer process node being the main one, accounting for about 30%. Discussions regarding more advanced process nodes after 2-nanometers have not yet taken place. Regarding the visibility of revenue in the second half of this year and the demand for 2-nanometer wafers next year, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR mentioned that it is currently in the second quarter and it is too early to discuss the second half of the year. There is uncertainty and risk due to tariffs, and a clearer picture may emerge in the coming months, which will be updated in the next earnings call. Currently, the demand for 2-nanometers is very strong, with the number of new tape-out customers exceeding expectations, and the number of new tape-outs far exceeding those of 3-nanometers and 5-nanometers in the same period. Q&A: Q: What is the current supply and demand situation for CoWoS for 2026? Will there still be a supply shortage in 2026? A: Previously, the demand for CoWoS far exceeded supply, and although the situation has improved slightly, a significant expansion of capacity is still needed to meet demand. We must double the CoWoS capacity, as it is currently operating at full capacity. Looking ahead to 2026, while we cannot provide specific data, the momentum is still strong. The company will work to balance supply and demand more effectively, with a more balanced supply and demand expected next year. Q: What are Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's views on expanding production in the US, and what requirements and cost transfers to customers will be made when accelerating expansion? A: Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's expansion in Arizona, USA, is in response to customer demand, as strong AI demand comes from customers such as Apple Inc., NVIDIA Corporation, AMD, Qualcomm, and Broadcom Inc. The company has communicated with the US government, hoping to obtain the necessary licenses to initiate factory construction, with about 30% of the 2-nanometer capacity expected to be located in Arizona, forming an independent advanced semiconductor manufacturing cluster. Regarding pricing, reflecting company value is an ongoing process, and as a capital-intensive business, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR needs high gross margins to achieve sustainable and healthy returns. The flexibility of geographic manufacturing is an important part of the value proposition offered to customers, and discussions with major customers are progressing well. Q: What impact do political risks such as recent bans have on Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's business, capacity planning, and strategy? A: These factors have been taken into account when providing growth prospects for the year. Q: What sensitivity analysis has Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR conducted, and how do tariffs affect capacity planning and utilization rates? How confident is the company in maintaining current capacity planning and utilization rates? A: Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR will continue to closely monitor the potential impact of recent tariff announcements on end-market demand. However, customer behavior has not changed, so the company is sticking to its original forecasts. Q: Given the underutilization of mature node capacity, will Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR consider slowing down capacity expansion in Japan or Europe, or relocating existing equipment from Taiwan to Japan or Europe instead of building new capacity? A: There are no plans to slow down capacity expansion in Japan or Germany because competitors do not have corresponding capacity for special processes in mature nodes. The implementation of capacity expansion is confidential information for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and will be disclosed later. Q: Has Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR been involved in semiconductor tariff negotiations between Taiwan and the US? Can the $16.5 billion investment resist the impact of semiconductor tariffs, and is there a possibility of exemptions for specific semiconductor tariffs? A: Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is a private company and does not participate in tariff discussions and negotiations between countries. Tariff decisions are the government's responsibility, and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR will fully respect them but will not participate. Q: Revenue grew by 13% compared to the second quarter. Is this because customers are trying to avoid the impact of tariffs and ordering ahead of time?Goods, or real demand? The annual revenue guidance indicates a slow recovery in the second half of the year. Has the impact of tariffs on consumer technology demand been considered? If the tariff situation changes, is it possible to revise the annual revenue guidance?.A.3525% Q.2%-3% A.3%-4% Q. A. Q. A. Q. A. Q. A.CEO Q.AI90 A.AIAI Q. Q.2026AIWhat are your thoughts on., Ltd. Sponsored ADR? Will these technologies be first applied in Taiwan's China province, or will consideration also be given to further investment in backend new technologies in Arizona?A: Customers continue to use Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's cutting-edge technology, and are increasingly adopting advanced packaging technologies. This year, the main focus is on CoWoS, and next year customers will start using more advanced packaging technologies such as SoIC. Regarding panel-level packaging, the company is actively developing it, currently in the feasibility research stage. It is too early to determine whether it will be expanded in Europe, Taiwan, or the United States, but it is likely to first be scaled up in Taiwan and then introduced in the United States. Q: Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's 2-nanometer capacity of 30% is in Arizona. When will this capacity start, and in the long term, will all advanced process nodes maintain a 30% proportion? A: The current plan is to build 6 wafer fabs in Arizona, with 2-nanometer being the main process node, accounting for about 30%. As for more advanced process technologies after 2-nanometers, discussions have not been conducted yet. Q: Given the current uncertainties, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR maintains its full-year revenue guidance and the 2-nanometer capacity plan for this year and next year. How is the visibility on revenue in the second half of this year and the demand for 2-nanometer wafers next year? A: We are currently in the second quarter, so it is too early to discuss the situation in the second half of the year. There is uncertainty and risks due to tariffs, and the next few months may bring clearer conditions, which will be updated in the next earnings conference call. Currently, the demand for 2-nanometer is very strong, with the number of new tape-out customers exceeding expectations, and the number of new tape-outs during the same period far surpassing 3-nanometer and 5-nanometer. Q: What is the current capacity of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's wafer fab in Japan, and how is its revenue contribution this year? A: The capacity of the wafer fab in Japan will reach 40,000 wafers once production ramps up. Compared to the overall company, the revenue contribution from this wafer fab is currently not significant this year.