TSMC Arizona Fab Reported to See 99% Profit Plunge

According to recent reports, TSMC's Arizona fab is facing serious financial pressure as soaring construction and operating expenses continue to erode profits.

Data shows that the site generated NT$4.232 billion in profit in Q2 2025, but that number collapsed to just NT$41 million in Q3 — a staggering 99% drop.

According to industry sources, TSMC's decision to build fabs in the U.S. was meant to support American customers seeking manufacturing reshoring while strengthening a more resilient global semiconductor supply chain. However, the reality on the ground has proven far more challenging. The cost of building and running advanced manufacturing lines in the U.S. is significantly higher than originally planned.

Behind the sharp profit decline is the enormous investment required to expand leading-edge production. TSMC's first Arizona fab (Fab 21 Phase 1) has already begun mass-producing 4 nm chips for major clients like NVIDIA and Apple. But with AI demand pushing the need for even more advanced nodes, the second Arizona facility (Phase 2) is racing to bring 3 nm — and eventually 2 nm — technologies online. This involves extremely costly process tools and infrastructure, driving up operational spending and compressing margins.

Analysts note that semiconductor manufacturing costs in the U.S. are at least 40%–50% higher than in Taiwan. Expenses tied to labor, construction, energy, and local supply chain support all continue to rise. To maintain technology transfer and production yield, TSMC has also deployed over a thousand engineers from Taiwan, adding ongoing travel, housing, and cultural adaptation costs. Additionally, importing and maintaining advanced equipment such as EUV lithography systems requires more complex approvals and higher service fees in the U.S.

According to industry forecasts, as TSMC ramps up 3 nm and future-generation technologies, its U.S. operations will likely remain less profitable than its fabs in other regions for some time.