An important reason why semiconductor manufacturers such as TSMC have set up factories in the United States is to avoid geopolitical risks, but they also have to accept the challenges brought by rising operating costs. According to SemiAnalysis summary data shared by analyst Jukan on the X platform, TSMC's production of chips in the United States will cause its profit margins to suffer significant losses. He also wrote that he believes one of the reasons why the United States wants TSMC to move its wafer fab to the United States is to increase the company's costs and weaken TSMC's competitiveness.
Specifically, the gross profit margin per wafer when TSMC produces 5-nanometer process chips in Taiwan and when producing the same products in the United States is 62% and 8% respectively, a difference of 54 percentage points. Among them, depreciation and labor costs are the main reasons for the difference.
Depreciation refers to the sharing of the purchase cost of the fab and its equipment over its useful life, and the specific difference is reflected in the total output during the life period. Data shows that the output of wafers produced using the same process in a U.S. factory may be only a quarter of that of a Taiwan factory, which means that the depreciation cost of a U.S. factory is nearly four times that of a Taiwan factory.
Economics and Politics
U.S. President Trump said in August last year that TSMC may invest US$300 billion in Arizona, including building wafer fabs, advanced packaging and R&D facilities in Arizona. This figure is nearly twice TSMC’s total previously announced investment in the United States.
TSMC’s move is in line with the U.S. government’s “America First” economic agenda and to ensure that geopolitical factors will not affect the company’s supply. However, building a stable supply chain in the United States could take decades.
In addition, taking into account construction costs and operating costs, TSMC's US wafer fab needs to generate more revenue to cover expenses, which requires TSMC to continue investing funds. On the other hand, high labor costs are also increasing the burden on American factories.
Former TSMC chairman Zhang Zhongmou once said that if equipment fails at 1 a.m., the Taiwanese team may complete the repair at 2 a.m., while the United States has to wait until the next morning. This is the difference in work culture.
From an efficiency and economic perspective, TSMC prefers to hire engineers from Taiwan to work in the United States, but this will also raise some policy issues because the U.S. government hopes that TSMC can promote local employment in the United States.
"Made in America", driven by political factors, is currently facing a key test of whether it is economically viable. In November last year, reports pointed out that the latest quarterly profit of TSMC’s U.S. business fell sharply from the previous quarter, from NT$4.232 billion to NT$41 million.