How much does TSMC’s investment contribute to Taiwan? Alex Lee of QIC: The Flywheel Effect has far-reaching impact

TSMC , the guardian of the nation, has expanded its investment of 100 billion US dollars in the United States, which has attracted the attention of the capital market. QIC held its Taiwan Capital Market Outlook for the first quarter of 2025 today. Founder and CEO Alex Lee pointed out today that as long as TSMC continues to invest in capital expenditures, the flywheel effect it brings to Taiwan's economy, national defense, and semiconductor supply chain will have a far-reaching impact.

According to internal assessments, every NT$100 of capital expenditure invested by TSMC is estimated to generate NT$300 in revenue and bring in NT$24 in government business income tax. TSMC's annual capital expenditure will cover nearly 50% of the annual defense budget through securities taxes, cash dividends, and business income tax, and will drive the market value of 114 Taiwanese semiconductor supply chains to grow 10 times to US$1.3 trillion in the next 10 years.

Lee pointed out that with the rapid development of global technology and manufacturing, TSMC, as the world's leading semiconductor foundry, has made increasing contributions to Taiwan's economy, national defense and semiconductor industry chain year by year, and has sought a balance between global expansion and local investment, providing continuous momentum for Taiwan's stable economic growth and national defense strength, and enhancing the competitiveness of Taiwan's semiconductor industry.

Lee analyzed that TSMC, as the core pillar of Taiwan's economy, currently accounts for 35% of the Taiwan Weighted Index. Since August 2016, TSMC has driven the total market value of the Taiwan stock market and GDP to 284%, far higher than the capital markets in the United States (194%) and Japan (150%), highlighting TSMC's dominant position in the global semiconductor market and its contribution to the stable growth of Taiwan's economy.

Lee explained that TSMC's influence on Taiwan's economy is increasing year by year. According to statistics from Kuanliang International, TSMC's annual capital expenditure as a percentage of Taiwan's GDP will increase from 4% in 2023 to 5% in 2025, and its market value as a percentage of GDP will also increase from 65% to 99% this year.

As for the defense field, TSMC's contribution is also not to be ignored. Lee pointed out that with the increase in Taiwan's defense budget, TSMC's annual capital expenditure is 1.6 times the defense budget, which not only shows TSMC's important position in Taiwan's economy and defense budget, but also highlights its irreplaceable role in ensuring Taiwan's national defense security and economic prosperity.

Lee shared that TSMC contributes a huge amount of securities transaction taxes every year, as well as cash dividends and business income taxes received by government agency shareholders. The proportion of TSMC in the national defense budget is estimated to increase sharply from 30% in 2023 to 47% in 2025. It can be said to be a veritable guardian mountain of the country, and this mountain has the potential to continue to grow taller and stronger. As long as TSMC continues to invest, it will continue to create cash flow and value for Taiwan's economy.

Lee pointed out that as the core driving force of Taiwan's economy, national defense and semiconductor industry, TSMC's global expansion strategy not only drives the development of Taiwan's local economy, but also lays the foundation for the long-term growth of Taiwan's semiconductor industry chain and makes far-reaching contributions to Taiwan. In the future, Taiwan will continue to play an important role in the global semiconductor industry and gradually become a leader in the global semiconductor industry.

（Picture Source：TechNews）

Source: https://finance.technews.tw/2025/03/27/flywheel-effect/