Investing.com -- Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) has adjusted its long-term gross margin guidance, according to TF International Securities analyst Ming-Chi Kuo. The semiconductor company had its earnings call today, where it revealed that the gross margin dilution from its U.S. factories would lead to a long-term gross margin above 53%, a reduction from the 58.8% in the first quarter of 2025.
The revised guidance is more significant than Kuo’s prior estimates. He had initially predicted that TSMC’s U.S. factories would reduce the company’s overall gross margin by approximately 1.5 to 2 percentage points. This was based on the U.S. capacity allocation and gross margin.
However, TSMC’s new guidance takes into account additional factors, including inflation and tariff-related costs. This adjustment indicates that these elements can significantly impact a company’s gross margins.
Interestingly, TSMC demonstrated its ability to pass on these additional costs to its customers, highlighting its strong bargaining position in the market. This move could potentially set a challenging standard for other companies in the industry.
Kuo humorously noted that TSMC might have revealed more than needed, making the business environment more challenging for others. Nevertheless, TSMC’s updated guidance provides a clear example of how inflation and tariffs can affect a company’s gross margins.
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