Taiwan Semiconductor Manufacturing Co. (TSMC) told shareholders on June 4 that the AI surge is creating major opportunities, but also leaving TSMC with the bulk of the investment and operating burden. Chairman C.C. Wei said the company's long-term edge still rests on technology, manufacturing efficiency, and customer trust.
Customer ties deepen, but risk remains with TSMC
At the annual shareholders' meeting, Wei was pressed on whether TSMC is co-planning demand with customers and sharing risk as strategic ties deepen. The question followed remarks from TSMC's earnings call and reports that Nvidia and Broadcom had used prepayments to secure capacity.
Wei said strategic partnerships with customers are important, but prepayments are not the only approach, and they are not always necessary. He also said that, even when customers pay part of the cost in advance, the pressure remains on TSMC because it still makes the final investment decisions, builds capacity, and handles operations.
"The pressure is still on TSMC. Making money is not that easy," Wei said.
The meeting also addressed recent comments by US President Donald Trump, who again claimed Taiwan had stolen the US chip industry. Some shareholders said the remarks could signal future policy pressure and affect TSMC's operating environment in the US. Wei did not directly address the political issue.
On compensation, Wei said employee bonuses have risen faster than inflation and are likely to keep increasing. He said bonuses grew by about 30% from 2023 to 2024, by another roughly 30% from 2024 to 2025, and he expected them to rise by more than 30% again from 2025 to 2026. "There is no ceiling to 30% growth," he said.
Capacity, overseas fabs, and competition
Wei also discussed TSMC's Nanjing fab, where the company has faced questions about mature-node competition in China. He said all overseas fabs follow four principles: customer demand, market demand, local government support, and operational efficiency. He added that the Nanjing fab has improved its competitiveness since starting with 16nm process technology, and that "there is no particular risk."
On global capacity and workforce allocation, Wei said customer demand remains the top priority, but Taiwan remains TSMC's most important research, development, and manufacturing base. He said Taiwan has the best talent, that R&D roots are there, and that TSMC's largest production base is also in Taiwan.
Wei said construction of TSMC's second fab in Kumamoto, Japan, will follow demand planning for 3nm production, with hopes that output can begin in 2028. "There is no shortcut to building semiconductor fabs. If we can move faster, we certainly will," he said.
CFO Wendell Huang said TSMC has already reduced its stake in Vanguard International Semiconductor Corporation, or VIS, and stopped appointing a legal entity representative to VIS's board starting in 2024, citing competition and corporate governance concerns. Huang said TSMC will not continue selling VIS shares in the foreseeable future, but cooperation between the companies, including in advanced packaging, will continue.
TSMC Co-COO Kevin Zhang said the company's Emerging Fund investment program is meant to help startup customers reach advanced processes earlier. He said TSMC will not invest in the supply chain and will only invest in companies that benefit its business.
TSMC highlights CoPoS packaging roadmap, keeps cautious stance on pricing
Wei also addressed competition from Intel, Samsung, and Elon Musk's Terafab. He said TSMC has always faced competitors and has repeatedly outworked them over the past 30 or 40 years. On Intel, he said it is both a customer and a competitor, and remains one of TSMC's top 10 customers. He said TSMC must make money from Intel and protect its own trade secrets.
When asked about Terafab, Wei said only, "I wish him well."
Wei said TSMC's next-generation advanced packaging technology, CoPoS, already has a pilot line and that volumes could become very large within 2 to 3 years. He said that if TSMC has that technology, it will remain the world's No. 1.
He also said TSMC is working to pass more of the energy, water, carbon, and infrastructure costs associated with chip manufacturing on to customers. "I want to do that too, and we are working on it," he said, adding that gross margin has already risen above 60% after years of effort.
He warned against abrupt price increases, using memory makers as an example. He said TSMC is focused on sustainable operations and long-term customer partnerships, rather than sharp pricing moves that cannot be maintained.
Article translated by Jingyue Hsiao and edited by Jack Wu
