Daily: TSMC posts record earnings, to raise capex amid US-Taiwan trade deal
7 min read.
Highlights
TSMC in Taiwan-US trade deal. Taiwan and the United States signed a trade deal that lowers the Trump-imposed tariffs of 20% to 15% in exchange for a US$250 billion investment. Much of the deal was reported earlier this week. TSMC will invest in new fabs in Arizona, which previous reporting has suggested will amount to four additional fabs in the next decade, though the most advanced nodes will remain in Taiwan.
TSMC beats earnings forecast. This comes as TSMC posted yet another blockbuster earnings report that beat investor expectations; quarterly profits jumped 35% to an all-time high. TSMC stock rose ~4% following the news. The Taiwanese chipmaker will also boost capital expenditure, targeting around US$56 billion this year.
OpenAI’s in-house AI chip. OpenAI will reportedly launch an in-house AI chip by the end of this year. It will be manufactured on TSMC’s 3nm process. A second generation of the chip is expected to be fabbed on the yet-to-be-developed A16 node. OpenAI has partnered with Broadcom to design their chips.
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1. Policy and Geopolitics
1.1
WSJ (01/15): Taiwan Pledges $250 Billion in U.S. Spending in Exchange for Lower Tariffs
The U.S. and Taiwan signed a trade deal Thursday aimed at boosting American production of semiconductors in exchange for lower tariffs, adding to the Trump administration’s efforts to bring critical industries to the U.S.
Under the agreement, Taiwan Semiconductor Manufacturing will add several new factories to its cluster in Arizona as part of a $250 billion investment in the U.S., the Commerce Department said. In exchange, the U.S. is cutting tariffs on Taiwanese goods to 15%, from 20%, and exempting Taiwanese chip companies like TSMC that are investing more in America. The contours of the deal were reported earlier in the week.
1.2
Bloomberg (01/16): Memory Shortage to Hit Nvidia China Approvals, US Lawmaker Says
Tight memory chip supplies will constrain the number of US export licenses for Nvidia Corp. to sell its H200 artificial intelligence processors to Chinese customers, according to the top Republican on the House China committee, citing terms of a Commerce Department rule issued this week.
In a letter to Commerce Secretary Howard Lutnick, Representative John Moolenaar called the shortage of dynamic random-access memory, or DRAM — a crucial input for AI accelerators — an “immediate challenge” under the new licensing conditions. Those requirements include exporters certifying that approved China shipments won’t create a shortage in the US market.
1.3
SCMP (01/16): China’s Zhejiang targets 3- to 7-nanometre AI chip breakthroughs to counter US chokehold
China’s eastern tech powerhouse Zhejiang, home to giants like Alibaba and the humanoid robotics start-up Unitree, has set clear targets to develop cutting-chips and chipmaking equipment over the next five years.
The province is the latest locality to prioritise innovation under its new five-year plan. It joins other hubs, including Shenzhen and Shanghai, that have thrown their weight behind Beijing’s nationwide strategy to develop indigenous technologies amid an intensifying rivalry with the United States.
The province will focus on chip design and wafer manufacturing, aiming to achieve rapid progress across 3- to 7-nm processing nodes, according to its draft industrial development document for 2026 to 2030.
1.4
Reuters (01/16): White House says 25% semiconductor tariffs a ‘phase one’ action
The U.S. Commerce Department’s 25% national security tariff on certain high-end semiconductors announced on Wednesday is a “phase one” action to protect the sector and could be followed by other announcements pending negotiations with other countries and companies, a White House official said on Thursday.
1.5
Axios (01/15): Bipartisan plan aims to create U.S. reserve for critical minerals
A bipartisan group of lawmakers will introduce new legislation Thursday to establish a $2.5 billion “Strategic Resilience Reserve” (SRR) for critical minerals, Axios has learned.
Most of the world’s supply is controlled by China, leaving the U.S. vulnerable to price swings and supply-chain disruptions for minerals needed to make advanced semiconductor chips and EV batteries.
Sens. Jeanne Shaheen (D-N.H.) and Todd Young (R-Ind.) — along with Reps. John Moolenaar (R-Mich.) and Rob Wittman (R-Va.) — will introduce the SECURE Minerals Act on Thursday morning.
2. Economy, Finance, and Business
2.1
Reuters (01/15): TSMC smashes forecasts with record profit, flags more US factories
TSMC, the world’s main producer of advanced AI chips, on Thursday posted a forecast-smashing 35% jump in fourth-quarter profit to a record high, predicted robust annual growth and flagged more U.S. manufacturing capacity was in the works.
Riding high on what it calls the “AI mega trend”, TSMC said its customers, and their customers, were “providing strong signals” and requesting capacity, forecasting 2026 revenue would rise nearly 30% in U.S. dollar terms.
2.2
FT (01/15): TSMC to boost capital spending as demand for AI chips surges
TSMC said it expected its revenues from AI chips to increase by about 55 per cent annually between 2026 and 2029, 10 percentage points higher than it forecast last year. It also raised its five-year forecast for its overall revenue through 2029 from 20 per cent to 25 per cent or higher.
Capital expenditure will be between $52bn and $56bn this year, one-third of its capital investments over the past five years and a jump of almost 30 per cent over last year.
The bullish outlook comes after the Taiwanese company reported a record NT$505.7bn (US$16bn) in net profit for the fourth quarter of 2025 and beat its own profitability guidance with a 62.3 per cent gross margin.
2.3
Bloomberg (01/16): TSMC Eyes Smaller Tech Gap Between US and Taiwan Chipmaking Fabs
Taiwan Semiconductor Manufacturing Co. will try to accelerate the transfer of its advanced chipmaking expertise to the US in the future, though it will still develop and maintain its most cutting-edge fabrication techniques at home.
“The most leading-edge technologies will be run in Taiwan because of practical reasons,” Chief Financial Officer Wendell Huang said in an interview on Thursday. “When they get stabilized, then we can try to accelerate for the technology to move overseas.”
2.4
Bloomberg (01/15): Apple and Tech Hardware Stocks Face ‘Crisis’ as Memory Prices Soar
Soaring prices for memory and storage components have turned companies like Sandisk Corp., Micron Technology Inc. and Western Digital Corp. into the hottest stocks in the market over the past year. But they’re causing headaches for many of their customers.
Hardware companies from Apple Inc. to HP Inc. are under pressure, as their need for expensive memory components becomes an investing risk — one that isn’t expected to reverse anytime soon.
3. Technology
3.1
TrendForce (01/15): OpenAI Reportedly to Deploy Custom AI Chip on TSMC N3 by End-2026, Second-Gen Planned for A16
OpenAI plans to launch a self-developed AI chip, codenamed “Titan,” by the end of 2026, using TSMC’s N3 process. The report adds that a second-generation version is reportedly planned on the more advanced A16 process.
As the report notes, OpenAI’s self-developed chip is expected to leverage ASIC design services from Broadcom. If the timeline holds, mass production is expected to begin in the second half of 2026, with development of the second-generation chip, Titan 2, also slated to start in the same period, the report says.
3.2
TrendForce (01/16): MediaTek Debuts Dimensity 9500s on TSMC 3nm and 4nm 8500, Targeting Upper-Midrange Market
MediaTek has unveiled the Dimensity 9500s and Dimensity 8500, targeting the upper-midrange smartphone market. According to ijiwei, the Dimensity 9500s represents an expansion of the Dimensity 9000 series lineup. It is built on TSMC’s 3nm process and continues MediaTek’s all-big-core CPU architecture.
3.3
Reuters (01/16): SiFive to adopt Nvidia technology for speedy links between chips
SiFive, which makes blueprints for parts of complex chips, said on Thursday it will become the first maker of RISC-V chip designs to integrate Nvidia technology that creates speedy links between chips.
Like SoftBank’s Arm Holdings - an industry giant, SiFive provides customers with blueprints so that they can build their own full chip designs. RISC-V is an open-standard alternative to Arm’s blueprints that has drawn fresh interest from companies like Alphabet’s Google and Meta as more details have emerged about Arm’s ambitions to become a chip designer in its own right.
3.4
SCMP (01/15): China’s SpacemiT to launch server-class RISC-V processor after raising US$86 million
Chinese semiconductor start-up SpacemiT, fresh off an over US$86 million funding round, is gearing up for mass production of its new RISC-V chips, using an architecture rivalling Intel’s and Arm’s, which is seen as Beijing’s hope for achieving chip self-sufficiency.
The Hangzhou-based company recently completed a series B funding round raising more than 600 million yuan from investors, including fellow Hangzhou firm Huaxia Hengtian, the Beijing Artificial Intelligence Industry Investment Fund and Hong Kong’s Brizan Ventures.
3.5
Bloomberg (01/15): Canon Eyes Possible Deals in Medical Devices and Chip Tools
Canon Inc. said it will explore acquisitions in lucrative arenas such as medical devices and chip tools in the coming years, while setting a lower dividend payout target of around 40%.
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