TSM Stock Slips Premarket Today — CEO Reportedly Says AI Chip Shortage Isn’t Ending Anytime Soon

• Despite the supply-demand gap, CEO Wei added that TSMC will refrain from suddenly raising prices to maintain a stable business.
• Two plots of land acquired in Arizona should be enough to satisfy TSMC's needs for a decade, Wei said.
• CEO Wei stated that the company will not be able to meet demands from its American customers even after its manufacturing facilities get operational in the U.S.

Taiwan Semiconductor Manufacturing (TSM) CEO C.C. Wei reportedly told shareholders at the annual meeting in Taiwan that AI chip demand will outpace supply for years to come, even as one of the world's biggest chipmakers races to expand its manufacturing footprint.

Wei's commentary hinted that production capacity is one of the bottlenecks at a time when hyperscalers and chip companies are investing heavily to build AI infrastructure.

According to a Bloomberg report, Wei said the company will not be able to meet demand from its American customers even after its manufacturing facilities become operational in the U.S.

At the time of writing, TSM stock was down over 2% premarket on Thursday.

TSMC’s Expanding Manufacturing Footprint

In an earnings call post the Q1 announcement, company management stated that it had acquired two land parcels in Arizona to build additional fabs and meet multiyear demand from its U.S. customers.

Later in April, according to a Reuters report, the company management said that it plans to open a chip packaging facility by 2029.   

Despite the supply-demand gap, Wei added that TSMC will refrain from suddenly increasing prices to maintain a stable business, the report stated. However, Wei reportedly added that it will be a long time before the company can meet customer demand.

Major hyperscalers are set to spend billions on AI infrastructure this year alone, and TSMC produces the majority of the world's advanced AI chips.

The U.S.-Taiwan Trade Pact

As a part of the U.S.-Taiwan trade pact, TSMC envisions building at least four more US chipmaking plants on top of six already planned, a total of 10 facilities entailing $165 billion in announced investments plus roughly $100 billion in additional capital, according to the report.

Two plots of land acquired in Arizona should be enough to satisfy TSMC's needs for a decade, Wei said. 

The expansion is critical as TSMC is essential for Nvidia's Blackwell GPUs, AMD's MI450/Helios chips, and custom ASICs from Broadcom and others.

The company raised its full-year sales guidance in April and said capital spending should trend toward the upper end of its $56 billion forecast range.

What Retail Thinks Of TSM

On Stocktwits, retail sentiment surrounding the stock has declined to ‘neutral’ from ‘bearish’ while message volumes decreased to ‘normal’ from ‘high’ in the past 24 hours. 

TSM stock has gained over 36% year to date.

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