qinbafrank
qinbafrank|Jan 15, 2026 09:28
Regarding the statement 'production capacity is very tight', a Q&A session at TSMC's phone conference is worth taking a look. Q: Could CC please share their views on the overall demand for AI and the semiconductor cycle. He mentioned that TSMC significantly increased its capital expenditure to support customers, but the market was worried about the AI foam. So he wants to know what specific feedback CC mentioned in the communication with customers and their downstream customers, and how long he believes this cycle will last. Answer: The Wei family (CC Wei) is good, Gokul, You are essentially asking if the AI demand is real. To be honest, I'm also very nervous. We need to invest $52 billion to $56 billion in capital expenditures, and if not treated prudently, it will be a disaster for TSMC. So in the past few months, I have spent a lot of time communicating with clients and their clients. I had to confirm that the requirements were genuine, so I asked those cloud service providers (CSPs). The answer is quite satisfactory to me: they demonstrated that AI is indeed helping their business grow and reflected in financial returns. I also verified their financial situation - they are very wealthy, sounding even richer than TSMC (laughs), so there is no doubt about it. I also specifically inquired about the application scenarios. A certain large-scale computing vendor told us that AI has improved the performance of their social media software and the user base continues to grow. I firmly believe in this. In addition, based on our own experience in applying AI, it has indeed helped us improve the productivity of wafer fabs. I have mentioned that a productivity increase of 1% to 2% is a waste for TSMC, which is why we can still maintain satisfactory gross profit margins during high cost periods. In summary, I believe that AI is not only real, but has also begun to penetrate into our daily lives. We believe this is a Mega Trend. Our American clients are requesting more support locally, so we must accelerate the expansion of our Arizona factory. Of course, most of our production capacity is still increased in Taiwan, China, China, because here the supporting facilities are the most complete and the progress is the most smooth. In the United States, we are also accelerating with the help of the government, and progress is currently good, although various licensing requirements still need to be met. In short, whether in Taiwan, China or Arizona, we are accelerating production expansion to meet AI demand. I can only say one sentence: Currently, production capacity is very tight, and we are doing our best to narrow the supply-demand gap. We must double our efforts this year and next year. We just bought our second piece of land in Arizona, which suggests our plan: we need to expand more wafer fabs there, and this "Gigafab" cluster will help improve productivity, reduce costs, and better serve American customers.
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