Taiwan Semiconductor Manufacturing's CFO Warns of Currency Volatility as "Big Uncertainty" Amid US Expansion.

Taiwan Semiconductor Manufacturing (TSM) sees foreign exchange volatility as a major uncertainty to its margins, according to CFO Wendell Huang. The company will review hedging strategies to manage the impact. Despite expanding in the US, TSM vows prudence in capital expenditures.

Taiwan Semiconductor Manufacturing (TSM), the world's largest contract chipmaker, is facing significant challenges due to currency volatility, particularly the appreciation of the New Taiwan dollar (NT$). According to CFO Wendell Huang, the company sees foreign exchange volatility as a "big uncertainty" to its margins and is reviewing various hedging strategies to manage this impact.

The NT$ has surged over 11% this year against the U.S. dollar, compressing margins by 3 percentage points without hedging. TSMC forecasts a 6% revenue drag in Q3 from further NT$ strength [1]. To address this, TSMC is exploring multiple hedging alternatives, including selling US dollars in the market spot, forwards contracts, and moving US dollar cash to an offshore holding company [2].

TSMC's strategic response to currency volatility includes geopolitical diversification. The company is expanding production in the U.S., Japan, and Germany, reducing reliance on Taiwan and insulating itself from trade disputes. The Arizona 3nm plant alone accounts for $65 billion of its $165 billion U.S. investment [1]. Additionally, TSMC is leveraging its technological leadership to maintain a competitive edge. The upcoming 2nm node promises 20% faster performance and 30% better power efficiency than the 3nm node, reinforcing TSMC's market position [1].

Despite these challenges, TSMC remains optimistic about its long-term prospects. The company projects AI-related revenue to double in 2025, with a 40% compound annual growth rate (CAGR) through 2030, underpinned by global AI infrastructure spending expected to hit $100 billion annually by 2027 [1]. TSMC's AI dominance, margin resilience, and global footprint make it a must-own stock for investors betting on the AI revolution.

References:
[1] https://www.ainvest.com/news/tsmc-ai-dominance-strategic-resilience-navigating-tariffs-currency-headwinds-2507/
[2] https://www.bloomberg.com/news/articles/2025-07-17/tsmc-warns-of-bigger-currency-hit-to-revenue-in-third-quarter