TSMC is accelerating expansion of its Arizona plant and sharply increasing investment to respond to growing demand for artificial intelligence.

On July 19, CNBC reported that TSMC is adding $100 billion to its Arizona investment as it moves to expand its U.S. semiconductor production base.

That brings TSMC's total Arizona investment to $265 billion. The company sees structural demand growth led by AI continuing for the next several years and is aggressively expanding U.S. capacity. It also raised its forecast for annual capital spending this year to $64 billion from $60 billion.

Chief Financial Officer Wendell Huang (웬델 황) cited strong customer demand in the U.S. market and government support as reasons for the increased investment. "Strong structural demand is continuing for years, and we have no plan to hand that opportunity to anyone else," he said. "As long as the megatrend continues, we can keep delivering profitable growth to shareholders," he added.

On the manufacturing side, it is also speeding the shift to advanced processes. TSMC said it is rapidly converting 5-nanometre capacity to 3-nanometre to meet customer demand. The first phase Arizona plant is already operating based on a 4-nanometre process.

Next-generation processes were also presented as a key pillar of the U.S. buildout. Huang said Arizona capacity will keep expanding over the next few quarters and pointed to the 2-nanometre process, set to enter in the third quarter, as a new revenue engine. The 2-nanometre process has already begun recording its first revenue from the second quarter.

The additional $100 billion will be invested not only in wafer fabrication plants but also in advanced back-end packaging facilities. TSMC said expanding production in the U.S. could dilute profitability somewhat in the early stages. Huang said building costs for U.S. plants are 4 to 5 times higher than in Taiwan. He said initial burdens would grow as overseas production expands, but in the long run it would help the development of the U.S. semiconductor ecosystem.

After the earnings announcement, the stock rose more than 1 percent intraday, but then fell 7 percent on July 18. It is up about 48 percent so far this year. "The company cannot control the financial markets," Huang said of the share-price move. "What we can do is focus on the fundamentals of the business," he said. He added that while pressure from rising component prices is significant, the impact is limited thanks to a strategy focused on the premium market.

The company is also responding to regulation. TSMC said it continues to support local customers while complying with all export controls related to its China business. China customers account for about 8 percent of total revenue.

The company is also accelerating efforts to secure future growth engines. Huang said the image sensor joint venture with Sony, in connection with the expansion potential of physical AI, is part of a strategy to broaden a long-term customer base in specialty processes. With U.S. production expansion, advanced-process conversion and packaging investment moving in parallel, TSMC is accelerating efforts to strengthen its supply chain to respond to rising demand for AI semiconductors.