Taiwan Semiconductor’s $100 Billion Arizona Expansion Is a Bullish Sign for Investors

A key part of that revenue growth will be from TSMC’s 2 nm processes. Taiwan Semiconductor just started getting revenue for its 2 nm process in the second quarter, with industry reports suggesting wafers are about $30,000 each. TSMC disclosed that it received 3% of its revenue from 2 nm sales.

TSMC breaks its revenue by process technology, and four years ago, wafers from 2 nm and 3 nm technologies weren’t even on the market. Nearly two-thirds of TSMC’s revenue comes today from 5 nm technologies and below.

Source: TSMC

That’s why TSMC is investing another $100 billion in Arizona. The company first broke ground in the U.S. in 2021, and has been gradually increasing its investment as the U.S. government has pressured foreign manufacturers to invest in the U.S. The $100 billion investment announced Thursday would involve building four new foundries, joining six current fabs and two advanced chip packaging facilities in the Phoenix area.

Yet another tailwind is TSMC’s pricing power. TSMC reportedly has a 73% market share in the global chip market, and executives like Nvidia CEO Jensen Huang have spoken glowingly about the company, saying in 2025, “You can’t overstate the magic that is TSMC.”

Wedbush Securities wrote in an analyst note this week that TSMC could raise mature-node chip prices early in 2027. Considering the unique position that Taiwan Semiconductor holds in the market, its customers would find it very difficult to seek an alternative foundry that they would trust with advanced chip manufacturing. 

What Are Analysts Saying About TSMC Stock?

Despite the solid earnings report, investors seemed to shrug off the information, with TSMC stock down 2.32% at Thursday’s COB amid broader sell-offs in the tech sector. Analysts have a rosier view, with 17 experts who cover the stock giving it a consensus “Strong Buy” rating. Thirteen recommend “Strong Buy,” two side with a “Moderate Buy,” while the remaining two give “Hold” ratings. The consensus price target of $463.92 represents potential upside of 13.2%. But a $590 Street-high price target indicates a potential for a 44% upside for the next 12 months.

TSMC could hit that upside, especially as investors realize that Q3 and Q4 revenue growth will likely accelerate from an already-solid Q2 report. The company’s 2 nm processes, combined with its reported plans to increase prices, may bode well for future profits. 

On the date of publication, Patrick Sanders had a position in: NVDA. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com