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) is facing significant challenges due to currency volatility, according to CFO Wendell Huang. The company's margins are being impacted by the appreciation of the New Taiwan dollar (NT$), which has surged over 11% this year against the U.S. dollar. This has led to a 3 percentage point compression in margins without hedging.

TSMC is actively reviewing and implementing various hedging strategies to mitigate this risk. These strategies include selling US dollars in the market spot, using forwards contracts, and moving US dollar cash to an offshore holding company [1]. The company expects a bigger hit from a stronger Taiwan dollar in the third quarter.

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 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.

However, TSMC is also being cautious with capital expenditures due to broader geopolitical and economic concerns. The company has raised its full-year sales growth forecast to 30% but is not increasing its spending even as capacity remains tight [3]. The upcoming 2nm node promises 20% faster performance and 30% better power efficiency than the 3nm node, reinforcing TSMC's market position [1].

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
[3] https://www.bloomberg.com/news/articles/2025-07-18/tsmc-prudent-about-spending-with-macro-uncertainties-cfo-says