TSMCChief Financial Officer Huang Renzhao said the company considers currency fluctuations to be a "big variable" for profit margins and will continue to evaluate hedging strategies to control its impact. "The exchange rate is a factor beyond our control, and there have been times when it went against us, but we managed to rely on other factors to maintain profitability, and that's what we're going to do," Huang said in an interview on Friday.
"We use different hedging options. The first is to sell dollars directly in the spot market," Huang said. "We also use forward contracts and transfer some of our cash, US dollar cash, to an offshore holding company whose financial statements are in US dollars."
Since then, the world's largest chip contract manufacturer has reported stronger-than-expected second-quarter profit growth and raised its revenue growth outlook for 2025, highlighting strong demand brought about by the global artificial intelligence (AI) spending boom. Despite such bright prospects, TSMC, along with other Taiwanese exporters and life insurance companies with large holdings of U.S. assets, still faces challenges from the Taiwan dollar's appreciation. The Taiwan dollar has soared more than 11% against the U.S. dollar so far this year.
During Thursday's earnings call, Huang warned that TSMC's third-quarter results could be hit harder by the stronger Taiwan dollar. He estimated that for every 1% appreciation of the Taiwan dollar against the U.S. dollar, the company's revenue would decrease by 1%. TSMC said last month that it would inject US$10 billion in capital into its overseas subsidiaries to strengthen currency risk hedging operations.