News
The sharp appreciation of the New Taiwan dollar (NTD) is raising concerns about its negative impact on Taiwan’s semiconductor industry, particularly foundries like TSMC, UMC, and Vanguard. As noted by Commercial Times, institutional analysis and industry data indicate that every 1% gain in the NTD typically reduces foundry gross margins by 0.3% to 0.5%. Since early Q2, the NTD has strengthened by over 10%, implying a potential 3% to 5% margin hit, the report indicates.
The following outlines the impact of NTD appreciation on the gross margins of Taiwan’s foundry players:
Vanguard International Semiconductor Corporation (VIS)
TSMC affiliate Vanguard International Semiconductor (VIS) held its earnings call on the 6th, forecasting modest growth for the second quarter. President John Wei said that demand for communication, industrial, and automotive semiconductors continues to recover, as mentioned by Commercial Times.
Based on an assumed exchange rate of NTD 30.9 to the U.S. dollar, wafer shipments are expected to rise by 3% to 5% quarter-over-quarter. However, gross margin is projected to decline from 30.1% in the first quarter to between 27% and 29%, according to Wei, as cited in the report.
As indicated by the report, a 1% appreciation of the New Taiwan dollar would reduce VIS’s gross margin by approximately 0.5 percentage points.
UMC
UMC says the appreciation of the New Taiwan dollar is affecting its profitability, though the impact is relatively minor. The company estimates that a 1% rise in the NTD reduces its gross margin by about 0.4 percentage points, as noted by Commercial Times. The report points out that exchange rate fluctuations are impacting gross margins in the second quarter for mature-node foundries, including VIS, UMC, and Powerchip.
TSMC
During its Q1 2025 earnings call, TSMC forecast Q2 consolidated revenue of USD 28.4–29.2 billion, based on an assumed exchange rate of NT$32.5 to the U.S. dollar. Under this assumption, it projected a gross margin of 57%–59% and an operating margin of 47%–49%.
However, further appreciation of the New Taiwan dollar could pressure margins and pose risks to TSMC’s quarterly results. According to TechNews, analysts estimate that each 1% gain in the NTD may reduce TSMC’s operating margin by 0.4 percentage points.
In response to inquiries on currency impact, TSMC said it has not adjusted its Q2 or full-year 2025 guidance and will continue to monitor exchange rate movements closely. Meanwhile, according to TechNews, TSMC has reportedly asked its suppliers to submit cost-reduction plans in response to the strengthening New Taiwan dollar.
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(Photo credit: Vanguard International Semiconductor)
