Trump is pushing to bring chip manufacturing back to the U.S., and TSMC says its overseas expansion will continue to squeeze profit margins.

According to CNBC, driven by the Trump administration’s push to repatriate advanced chip manufacturing to the United States, global leading wafer foundry TSMC stated that its overseas capacity expansion is driving up production costs and will continue to weigh on the company’s profit margins over the next several years. Since Trump returned to the White House in 2025, TSMC has announced a total of $200 billion in U.S. investments, including the newly unveiled $100 billion advanced semiconductor manufacturing and advanced packaging project. The White House noted that these investments are outcomes of Trump’s trade and industrial policies. TSMC’s second-quarter net profit rose 77.4% year-over-year, hitting another all-time high, with a gross margin of 67.7%—up from 66.2% in the first quarter. However, Chief Financial Officer Huang Renzhao said the launch of overseas fabrication plants (fabs) will continue to dilute gross margins, projecting an initial gross margin pressure of 2 to 3 percentage points in the coming years, which could expand to 3 to 4 percentage points later. Morningstar analysts estimate that chip production costs in the U.S. are 20% to 50% higher than in Taiwan, China, depending on factors such as subsidies, tax credits, and other cost elements. The market widely expects TSMC to pass part of the costs to customers via price increases. Earlier media reports said TSMC plans to raise its advanced and mature process foundry prices by up to 10% in 2027. Analysts pointed out that despite higher onshore U.S. construction costs, driven by growing AI demand, supply chain diversification, and U.S. industrial policies, TSMC will continue to expand its U.S. capacity layout. Leveraging its leading position in advanced process technology, the company boasts strong cost-shifting capabilities.