TSMC U.S. Fab Shutdown Scraps Thousands of Wafers

According to people familiar with the matter, TSMC's Fab 21 plant in Arizona briefly halted production near the end of last quarter after a power outage hit a facility that supplies the fab with industrial gases. The disruption cut off a critical material used in chipmaking and forced the site to stop for several hours, reportedly scrapping thousands of wafers that were in production for major customers such as Apple, Nvidia, and AMD.

Sources say the incident happened in mid-September and was linked to an electrical failure at Linde Group, the UK-based industrial gas and engineering company that provides gas services to the fab. Unlike its Taiwan operations, where TSMC runs much of its own gas infrastructure, the Arizona site relies on an outsourced setup. While insurance may cover part of the loss, TSMC has asked Linde to investigate the root cause and take corrective action.

The timing matters. TSMC Arizona turned profitable in the first quarter this year, showing the company can ramp advanced manufacturing even in higher-cost regions like the U.S. But in the third quarter, net profit at the U.S. unit reportedly plunged 99% to about $1.4 million. Analysts have pointed to rising operating costs as a major factor, and the newly revealed September shutdown offers another possible explanation for the sharp drop.

In a response to questions about the outage, TSMC said its Arizona subsidiary has begun contributing positively to revenue, but profits can fluctuate due to multiple factors and should be viewed over time. The company also reiterated earlier guidance that overseas capacity expansion from 2025 onward is expected to pressure gross margins over the next five years.

Unplanned downtime is unusual for TSMC because its fabs typically run 24/7. With tools costing millions of dollars, even an hour of idle time can translate into huge losses. Because this incident hit right at the end of the quarter, there was little room to recover the lost output before financials were finalized—amplifying the impact on results and reminding the industry how fragile semiconductor supply chains can be when a single link breaks.