Situational Awareness LP bets against TSMC as foundry costs bite
TSMC management warns of 2% to 3% gross margin dilution from late 2026 as capital expenditures hit the high end of guidance.
Leopold Aschenbrenner’s hedge fund, Situational Awareness LP, has taken a bearish position on Taiwan Semiconductor Manufacturing (TSMC), acquiring put options for approximately 1.5 million shares in the first quarter of 2026. This move marks a significant escalation in the fund’s stance, following a previous short position in the third quarter of 2025 which consisted of put options for 270,000 shares and was fully liquidated by the end of the following quarter.
Aschenbrenner’s decision appears driven by the substantial capital expenditure required for TSMC’s fabrication plant expansions in the United States, Japan, and Germany. The fund cites that overseas construction costs are estimated to be four to five times higher than building identical facilities in Taiwan’s Hsinchu or Tainan regions. This cost disparity highlights the financial inefficiency of diversifying the supply chain to satisfy Western political demands.
TSMC management has corroborated these cost pressures, announcing that full-year 2026 capital expenditures will be at the high end of the $52 billion to $56 billion range. In its first quarter 2026 update, the company explicitly warned that the combination of overseas fab expansions and the ramp-up of next-generation nodes will trigger a 2% to 3% dilution in gross margins.
This margin compression is expected to begin in the latter half of 2026 and extend into 2027. The warning underscores the operational challenges TSMC faces as it transitions from a concentrated manufacturing model in Taiwan to a geographically dispersed network, a shift that impacts both construction timelines and long-term profitability metrics.
While TSMC remains a critical manufacturing partner for major technology firms including NVIDIA, Aschenbrenner’s latest filing suggests a preference for other artificial intelligence stocks that offer greater upside potential with less downside risk. The fund’s repeated bearish bets indicate a conviction that the current geopolitical supply chain restructuring will weigh heavily on TSMC’s financial performance over the coming years.
