**TSMC Faces Potential Challenges Amid Trump's Re-Election Campaign**

Investing.com – The Taiwan Semiconductor Manufacturing Company (NYSE:TSM), a key player in the global semiconductor industry, could see new challenges due to political shifts in the United States. Former President Donald Trump's re-election campaign has brought attention to the risk of increased tariffs on foreign semiconductor manufacturers like TSMC, aiming to bolster domestic production.

Trump has emphasized the necessity for the U.S. to reduce its reliance on overseas semiconductor firms, which could directly impact TSMC. A reevaluation of the CHIPS Act and the introduction of higher tariffs on foreign-produced semiconductors could disrupt TSMC’s cost structure and supply chain logistics. This is particularly concerning given that over 60% of TSMC's revenue comes from U.S. clients, although much of the chip production supports electronic products assembled outside the U.S., such as the iPhone and AI data centers.

According to Citi analysts led by Laura Chen, applying tariffs based on semiconductor content in imported finished products would entail intricate audits across thousands of devices containing various chips, potentially escalating costs throughout the technology supply chain.

Despite these looming risks, TSMC's fundamentals appear solid. The company's ongoing Arizona facility expansion, backed by a $6.6 billion subsidy from the CHIPS Act, is progressing, with mass production anticipated to begin in 2025. Analysts note that TSMC's N4 production at the Arizona fab will commence in 2025 with a capacity of 20,000 wafers per month, and subsequent fabs are also underway. Improved yield rates comparable to TSMC's Taiwan operations suggest manageable margin dilution despite rising overseas costs.

Moreover, TSMC continues to see strong demand from AI data centers and edge AI devices, which fuels healthy earnings growth. Projections indicate a 30% year-on-year increase in this segment. The analysts highlight a structural upward trend in gross margins driven by yield rate enhancements and better utilization rates.

Citi maintains a Buy rating for TSMC stock, setting a price target of NT$1,540, implying a nearly 47% return. Recent surges in TSMC shares to all-time highs are attributed to stronger-than-expected third-quarter earnings and optimistic forecasts driven by robust AI technology demand.

In conclusion, while geopolitical tensions and potential U.S. restrictions on China post-election introduce uncertainties, analysts remain confident in TSMC's solid execution and robust systems, both internally and in coordination with the U.S. Department of Commerce, to manage these risks effectively.