Tariff Cuts And US Investments Reframe TSMC Growth And Valuation Story

The US and Taiwan have agreed to lower tariffs on Taiwanese imports, directly affecting Taiwan Semiconductor Manufacturing’s export terms into the US market. The Taiwanese government has pledged new investments in US semiconductor, energy, and AI sectors, with major commitments from Taiwan Semiconductor Manufacturing. These moves mark a shift in cross border cooperation that could influence how semiconductor supply chains and technologies are structured globally. Taiwan Semiconductor Manufacturing, NYSE:TSM, comes into this trade and investment reset with a recent share price of $362.26 and a 1 year return of 82.2%. Over 3 years, its return is about 4.3x, and over 5 years it stands at 192.4%. That backdrop helps explain why changes to tariff treatment and overseas commitments attract close attention from investors. The lower US tariffs and fresh US focused investment plans could influence how Taiwan Semiconductor Manufacturing positions its production, partnerships, and capital spending over time. For you as an investor, the key questions now center on how these policy shifts might affect the company’s access to US demand, its cost structure, and its role in future semiconductor and AI build outs. Stay updated on the most important news stories for Taiwan Semiconductor Manufacturing by adding it to your watchlist or portfolio. Alternatively, explore our Community to discover new perspectives on Taiwan Semiconductor Manufacturing. NYSE:TSM Earnings & Revenue Growth as at Feb 2026 We've flagged 1 risk for Taiwan Semiconductor Manufacturing. See which could impact your investment. The tariff cut from 20% to 15% directly reduces the cost of TSMC’s chips entering the US, which could improve its price competitiveness versus foundry peers such as Samsung Electronics and Intel. Combined with Taiwan’s pledge to invest more than US$250b in US semiconductor, energy, and AI production, including TSMC’s US$100b commitment, this agreement ties the company more closely to US AI and high performance computing build outs. For a contract foundry that relies on large, long term customer relationships, closer alignment with US policy and capital spending could support order visibility, especially as AI compute demand remains a central theme. For you, the trade off to think about is that bigger US exposure may also come with higher fixed costs, execution complexity across multiple geographies, and potential political expectations around future capacity allocation. The agreement could influence where TSMC places its most advanced nodes versus mature-node production, how it prices wafers for different customers, and how its multi year capex plans balance between Taiwan and overseas fabs. Execution on the large US projects, supply chain reliability, and any shifts in customer mix across AI and non AI demand are likely to be key focus points after this announcement. The Risks and Rewards Investors Should Consider ⚠️ Large US-focused capex programs can strain execution and may pressure returns if construction or ramp timelines slip. ⚠️ Analysts have flagged that TSMC has a high level of non cash earnings, which can make reported profit quality harder to interpret. 🎁 Earnings are forecast to grow 17.47% per year, suggesting analysts see room for further profit expansion alongside these trade and investment moves. 🎁 TSMC’s P/E of 28.9x is below the 42.3x semiconductor industry average and the company is described as trading at good value compared to peers and industry, which some investors may view as supportive if the new agreement helps sustain demand. What To Watch Going Forward From here, you may want to watch how TSMC phases its US$100b US investment, including the timing of fab build outs, advanced-node roadmaps, and any updates on cost-sharing or incentives from US authorities. Keep an eye on US versus non US revenue mix, margins from overseas fabs compared with Taiwan, and whether AI-related partnerships translate into long term, contract-backed capacity commitments. Any further policy shifts between the US, Taiwan, and other chipmaking regions, as well as capex plans from large customers such as US hyperscalers, will also matter for how this agreement ultimately feeds into TSMC’s earnings profile and capital intensity. To ensure you're always in the loop on how the latest news impacts the investment narrative for Taiwan Semiconductor Manufacturing, head to the community page for Taiwan Semiconductor Manufacturing to never miss an update on the top community narratives. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Taiwan Semiconductor Manufacturing might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free Analysis