TSMC Stock Surges on Major U.S. Expansion Deal and Strong Preliminary Results

TSMC US8740391003

A landmark trade agreement between the United States and Taiwan has set the stage for a massive strategic shift for semiconductor giant TSMC. In exchange for reduced tariffs, the chipmaker has committed to a dramatic expansion of its American manufacturing footprint, with potential investments reaching $165 billion. This news coincides with the company releasing preliminary quarterly figures that substantially outperformed market expectations.

Ahead of its official earnings release scheduled for January 15, TSMC disclosed key fourth-quarter 2025 financial data. Revenue for the period reached NT$1.046 trillion, approximately $33.1 billion. This represents a significant year-over-year increase of 20%.

The primary growth engine remains the unrelenting demand for high-performance chips required for artificial intelligence applications. Utilization rates for TSMC’s most advanced manufacturing nodes continue to operate at record levels, fueled by major clients in the AI sector.

Strategic U.S. Build-Out Secures Supply Chains

The core of the new bilateral agreement involves a substantial concession from Washington: U.S. import duties on Taiwanese goods will be lowered from 20% to 15%. This adjustment brings Taiwan’s trade status in line with that of allies like Japan and South Korea.

TSMC’s reciprocal commitment is extensive. The company will construct at least five additional semiconductor fabrication plants in Arizona. This expansion will bring the total number of facilities at the site to six. While the first factory is already operational and a second is nearing completion for a 2028 production start, this new phase could see total capital expenditure hit $165 billion.

Beyond trade policy, this move is a strategic effort to de-risk geographically concentrated supply chains for key customers such as Nvidia and Apple, while mitigating broader geopolitical concerns.

Analyst Community Raises Price Targets

The dual catalysts of strong financial performance and a clear, large-scale U.S. roadmap have prompted several financial institutions to revise their equity valuations upward.

Goldman Sachs increased its price target to NT$2,330, implying a potential upside of 35% from recent levels. JPMorgan followed, raising its target to NT$2,100 and citing AI-driven growth momentum. Morgan Stanley maintained its "Overweight" rating with a NT$1,888 target.

The analyst consensus projects revenue growth of around 30% for 2026. For the current fiscal year, TSMC has guided capital expenditures in the range of $40 to $42 billion. The company's gross margin for Q4 is estimated to be between 59% and 61%.

Market Focus Shifts to Upcoming Earnings Call

TSMC's shares recently traded at $331.21, hovering near a 52-week high. The stock has gained nearly 4% since the start of the year and has advanced 69% over the past twelve-month period.

With the regulatory uncertainty surrounding the U.S. investment now resolved, investor attention is firmly fixed on the upcoming earnings conference call on January 15. Market participants expect management to provide detailed timelines for the new Arizona facilities and forward-looking guidance for 2026.