A Critical Month Ahead for TSMC: Geopolitical and Legal Challenges Test Chip Giant’s Resolve

December marks a pivotal period for Taiwan Semiconductor Manufacturing Company (TSMC). As its shares exhibit relative calm on the market, a potent combination of geopolitical tension and high-stakes litigation brews behind the scenes. Investors are left to weigh whether the firm's massive expansion plans in the AI sector can offset looming risks emanating from both China and the United States.

Undeterred by significant headwinds, TSMC is accelerating its capacity build-out. Confirmed reports outline plans for three new 2-nanometer fabrication plants in Taiwan. The scale of investment is colossal, with approximately $28 billion (900 billion NT$) earmarked to widen the company's competitive moat.

This bold strategy directly targets the severe supply shortage for advanced chips that has characterized 2025. It sends an unambiguous signal to the market: management believes the sustained demand fueled by the artificial intelligence boom will, in the long term, outweigh persistent geopolitical uncertainties.

The Nanjing Deadline Looms

A pressing concern for shareholders carries a hard deadline: December 31, 2025. In precisely 30 days, TSMC will lose its blanket "Validated End-User" (VEU) authorization from the U.S. government for its fabrication facility in Nanjing, China.

Should investors sell immediately? Or is it worth buying TSMC?

The expiration of this special status means that, starting in January, the company must apply for individual export licenses to import U.S. chipmaking equipment. This process primarily impacts the production of older-generation semiconductors (12nm to 28nm). While the Nanjing plant contributes only a single-digit percentage of total revenue, the operational burden and risk of delays for maintenance and expansion will increase substantially due to these new bureaucratic hurdles.

Intellectual Property Battle Heats Up

Simultaneously, TSMC is fighting on another front to protect its most valuable asset: intellectual property. The company has filed a lawsuit against Wei-Jen Lo, a former senior vice president who departed for U.S. rival Intel.

The allegations are serious, centering on the potential leakage of confidential information regarding upcoming 2nm, A16, and A14 process technologies. This legal dispute highlights how fiercely the industry leader is guarding its technological edge in sub-3-nanometer chips. Given its dominant market share exceeding 70% in this segment, safeguarding these research and development strategies is existential.

Market Stability Faces an Imminent Test

Trading at 250.50 euros at the start of the week, TSMC's share price appears remarkably stable given this complex backdrop, hovering almost exactly at its 50-day moving average. For now, the market seems to be focusing on the firm's robust fundamentals and the promise of AI-driven growth. However, the next 30 days leading to the expiration of the China licenses will rigorously test investor nerves.