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TSM Arizona records initial profit following its initial operation

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TSM Arizona records its first profit since inception
TSM Arizona records its first profit since inception

TSM Arizona records initial profit following its initial operation

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In a significant development, TSMC's Arizona subsidiary, a wholly-owned entity, has recorded its first-ever profit in the first half of this year. The profit, amounting to NT$4.52 billion (US$150.1 million), marks a dramatic turnaround from the unit's previous losses.

The profitability at the Arizona unit was driven primarily by the initiation of advanced semiconductor manufacturing. TSMC broke ground on a large, state-of-the-art fab focused on 4nm chips and ramped production capacity. Remarkably, the yields from this fab are "right on par" with TSMC's main Taiwanese plants, despite higher operational costs.

Key factors contributing to the Arizona unit's profit include the scale and focus of the chip fab, built with an investment of about $20 billion and designed to produce advanced chips at 20,000 units per month. Efficient yield rates and strategic importance, underpinned by rising demand for cutting-edge semiconductors, have also played a crucial role.

In contrast, while TSMC has operations in Japan through its 73%-owned subsidiary, Japan Advanced Semiconductor Manufacturing (JASM), the available information for the first half of 2021 does not highlight a similar profit milestone or growth dynamics. Japan's broader export challenges and economic headwinds, including declining exports to key markets and tariff effects, may have constrained performance in Japanese operations.

TSMC's Arizona subsidiary has major customers including Apple Inc, Nvidia Corp, and Advanced Micro Devices Inc. The financial statement of TSMC shows the profit and loss of its Arizona subsidiary. TSMC attributes the turnaround of the Arizona unit's profit to strong market demand and high factory utilization.

Meanwhile, TSMC's Japanese unit, JASM, recorded a NT$4.52 billion loss in the first half of this year, widening from a loss of NT$1.48 billion a year earlier. The subsidies received by TSMC were primarily used to offset the purchase costs of property, plants, and equipment, as well as a portion of construction and production expenses.

Looking ahead, TSMC's Arizona subsidiary's second fab is scheduled to begin construction later this year and will ramp up production soon with 3-nanometer technology.

This report is brought to you by Lisa Wang.

References:

  1. Export Headwinds Cited as Constraint on Japan's Tech Sector
  2. TSMC's Arizona Fab Is Profitable, but at a Cost
  3. TSMC's Arizona Fab Is Profitable, but at a Cost

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