Taipei, July 26 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, said on Monday that it will do its best to maintain its gross margin above 50 percent in the long term.

In the annual general meeting held on Monday, TSMC Chairman Mark Liu (劉德音) told shareholders that the company remains prudent in global expansion by taking into account customers' needs as well as any possible risks to strengthen its gross margin, which refers to the difference between revenue and cost of goods sold.

"As the company is working closely with its clients, they are expected to share the costs burden when TSMC expands its production globally, which is expected to maintain its profit margin," Liu said. "I am confident that TSMC will achieve its long-term goal to have its gross margin top 50 percent."

In an investors conference held on July 15, TSMC revealed that its net profit for the second quarter of this year fell 3.8 percent sequentially since its gross margin fell 2.4 percentage points from a quarter earlier, due to higher depreciation in the 5 nanometer process, the latest technology in which the chipmaker has launched mass production.

TSMC is developing the more sophisticated 3nm and 2nm processes and it is scheduled to start commercial production of the 3nm process in the second half of 2022.

The fall in the second quarter's gross margin had raised concerns over TSMC's bottom line, sending its shares lower in recent sessions.

TSMC has said it is considering expanding investment in the United States and Japan in order to meet strong demand from its customers in those markets.

According to TSMC, construction of a US$12 billion 5nm wafer plant in the U.S. state of Arizona is being carried out smoothly and the fab is expected to begin production in 2024, using the 5nm technology.

Liu said TSMC's expansion has secured support from its clients worldwide, with American buyers accounting for almost 70 percent of the total.

He added that most of TSMC-made chips used by U.S. clients are for the production of consumer electronics items, adding that although a small fraction of its chips is used for infrastructure and national security purposes in the U.S. market, his company will try hard to meet their needs.

In Japan, TSMC is studying the possibility of setting up a wafer plant.

Liu said TSMC's sales will grow by more than 20 percent from a year earlier in 2021 U.S. dollar terms, beating the average of 20 percent expected for the entire pure wafer foundry industry.

Liu added that TSMC, which takes a more than 50 percent share in the world's pure wafer foundry industry, has faith in its competitive edge as the company has never stopped pursuing an upgrade of technologies and production expansion.

(By Chang Chien-chung and Frances Huang)

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●Origin：Focus Taiwan
●Link：https://focustaiwan.tw/business/202107260007