TipRanks Analyst Rating: Buy TSMC on Strong US Presence and Resilient Segments Amid Tariff Concerns

Bank of America Securities analyst Brad Lin reiterated a Buy rating on TSMC with a price target of $290.00. Lin's rating is based on TSMC's significant investment in US manufacturing, which could exempt it from proposed US Section 232 semiconductor tariffs. Even if tariffs are imposed, Lin expects minimal impact on earnings due to resilient AI and HPC segments and attractive valuation.

Taiwan Semiconductor Manufacturing Company (TSMC) has been in the spotlight following recent developments that may exempt it from upcoming U.S. Section 232 semiconductor tariffs. Bank of America Securities analyst Brad Lin reiterated a Buy rating on TSMC with a price target of $290.00, highlighting the company's significant investment in U.S. manufacturing as a key factor in this potential exemption [1].

TSMC's multi-phase Arizona projects, with a total investment of US$165 billion, increase the probability of exemption, according to BofA. This substantial investment not only reduces near-term downside risk but also enhances TSMC's competitive position relative to peers with smaller or no U.S. footprint [1]. The firm expects even if tariffs are applied, the earnings impact would be modest. AI and High-Performance Computing (HPC) segments, major growth drivers, are expected to remain resilient due to low price elasticity and strategic procurement by hyperscalers [1].

Consumer electronics, which account for about 40-50% of TSMC's revenue, are more price-sensitive. Thus, U.S. volumes could decline modestly if costs are passed through. BofA estimated a potential 0.8-4.0% earnings impact, but noted that valuations remain attractive at 18x 2026E PE, with strong AI demand likely offsetting any shortfall [1]. The analysts also highlighted potential risks across the broader Taiwan semiconductor supply chain, including OSAT and other ecosystem partners, which could still face tariff exposure [1].

TSMC's strong performance in the AI chip market has been a significant driver of its success. The company manufactures around 90% of the world's advanced AI chips, with High-Performance Computing accounting for 60% of total revenue [4]. This dominance is reflected in the company's record-breaking revenue growth, with consolidated net revenue reaching approximately 323.17 billion New Taiwanese dollars (roughly $10.66 billion) in the second quarter of 2025 [4].

TSMC's Chairman C.C. Wei has announced a $100 billion expansion of the company's U.S. manufacturing investment, adding to a prior $65 billion commitment for three Arizona fabs. This strategic move not only strengthens TSMC's position in the U.S. market but also aligns with geopolitical dynamics shaping the semiconductor industry [4]. The expansion is expected to boost TSMC's production capacity and further solidify its relationships with major U.S. clients like Apple and Nvidia.

Despite potential headwinds from U.S.-China trade tensions, TSMC remains optimistic about its future performance. The company has provided strong guidance for the third quarter of 2025, projecting revenue between $31.8 billion and $33.0 billion [4]. This positive outlook is supported by continued strength in leading-edge process technologies and the ongoing AI boom.

TSMC's tariff exemption and expanded U.S. presence are likely to have far-reaching effects on the global semiconductor industry. The move strengthens TSMC's competitive position against rivals like Samsung and may influence other chip manufacturers to increase their U.S. investments [4]. Additionally, it highlights the growing importance of securing domestic chip production capabilities for major economies.

As TSMC continues to ride the AI wave and strengthen its global footprint, the company's success story serves as a testament to the critical role of advanced semiconductor manufacturing in driving technological innovation and economic growth in the AI era.

References:
[1] https://www.investing.com/news/stock-market-news/tsmc-implications-from-upcoming-us-section-232-semiconductor-tariffs-4188355
[2] https://finance.yahoo.com/news/tsmc-implications-upcoming-u-section-130650401.html
[3] https://www.aol.com/chip-giant-tsmc-newest-member-152815927.html
[4] https://theoutpost.ai/news-story/tsmc-rides-ai-wave-to-record-revenue-secures-tariff-exemption-18865/