Taiwan Semiconductor Manufacturing Company (TSMC) is pursuing two key strategic initiatives that will determine its trajectory in the coming years. These moves address a central challenge for the semiconductor industry: producing high-performance artificial intelligence (AI) chips at scale in locations that are increasingly in demand both by customers and geopolitical considerations. Two focuses are breakthroughs in advanced packaging technology and the potential for significant expansion of the U.S. manufacturing footprint facilitated by the new trade framework.
The company enters this strategic phase from a position of financial strength. TSMC reported fourth-quarter 2025 revenue of more than $33 billion, representing more than 20% year-over-year growth. This performance was primarily driven by the demand for high performance computing (HPC) and AI applications. Reflecting this strong performance, the Board of Directors on February 10 approved a cash dividend of NT$6.0 per share for the fourth quarter of 2025.
Looking to the future, TSMC has outlined a 2026 capital expenditures (CapEx) budget in the range of $52 billion to $56 billion. This significant investment confirms the company’s commitment to maintaining its technological leadership and expanding production capacity.
The critical role of advanced packaging
A key technology frontier for TSMC is advanced packaging, which is becoming as important as transistor miniaturization to improve performance, density and energy efficiency. The company recently announced progress in this area, where chip-on-wafer-on-substrate (CoWoS) technology remains a central pillar.
To alleviate the ongoing AI chip shortage, TSMC is aggressively expanding its CoWoS packaging capabilities. Previous reports indicated a target of 130,000 CoWoS wafers per month by the end of 2026, an almost quadrupling from the production capacity level at the end of 2024. The majority of this expansion will take place at the AP7 facility in Chiayi, Taiwan, which will be ramped up in stages through 2027. Once completed, it will be the world’s largest advanced packaging facility.
US expansion gains new momentum
Parallel to technological advances, TSMC’s manufacturing regions are also evolving. A new trade agreement is expected to be signed between Taiwan and the United States, which is expected to lower tariffs and streamline investment in U.S.-based semiconductor, energy and AI projects. According to the Financial Times, the proposed rules include substantial incentives for companies building new facilities in the United States, allowing them to import chips duty-free during the construction phase up to 2.5 times the planned capacity of their future factories.
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The development adds context to reports on Monday that suggested TSMC was considering an additional US investment package worth $100 billion. If this happens, the total investment in the United States will be approximately $265 billion. The company has already committed $165 billion to the Fab 21 complex in Arizona, which will include six manufacturing modules, two advanced packaging plants, and a research and development center.
Recent land acquisitions support the feasibility of further expansion. TSMC has purchased an additional 900 acres adjacent to its existing 1,100-acre site in Arizona. Reports speculate that up to five more manufacturing plants could be built on the land, which could be formally announced in April.
Production mix and geographic focus
Despite its ambitious international plans, TSMC insists that Taiwan will remain its manufacturing core. The company estimates that up to 30% of chips produced at the 2-nanometer node and more advanced technologies could eventually be manufactured in the United States. Taiwanese government officials have dismissed suggestions that 40% to 50% of the country’s chip production could be moved overseas.
The technology breakdown of TSMC’s revenue highlights the company’s focus on the cutting edge. In Q4 2025, “advanced technologies” (defined as 7nm and below) accounted for approximately 77% of total wafer revenue. For the full year of 2025, this number was 74%, up from 69% in 2024. High-performance computing accounted for 55% of revenue in the fourth quarter and 58% of the full-year 2025 total.
The company’s near-term execution will depend on two factors: the company’s successful expansion of CoWoS packaging capacity as planned by the end of 2026, and a potential announcement in April about additional U.S. factories and details of a $100 billion investment package.
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