U.S. chip factory profits plunge 99%, TSMC says it will help the U.S. improve its supply chain

TSMC has expanded its overseas presence in recent years, including investing US$165 billion in the US market. In the future, the US may require it to increase its investment to US$200 billion or more, and it will also transfer advanced processes, packaging and personnel training. TSMC has built a phase one factory in Arizona, USA, to produce the 5nm (called N4) process. Apple, AMD and NVIDIA have all become customers of the US factory.

However, the cost of producing chips in the United States is also high, and profits will be significantly reduced. TSMC’s previously released financial report information shows that,The profit of American companies in the Q3 quarter was only NT$41 million, a 99% drop from the NT$4.223 billion in the Q2 quarter.

Although this is mainly related to the construction of the second phase of the US chip factory, construction and depreciation costs are relatively high in the early stage, and profits are directly diluted.

Chip production in the United States will also face increased costs in manpower, regulations and other aspects, which will also significantly increase costs.

Recent analysis by SemiAnalysis shows that the final cost of 12-inch wafers in the US 5nm factory reached US$16,000, while TSMC’s local factory only cost US$6,681, and the gross profits on both sides were US$1,377 and US$10,819 respectively.As a result, the gross profit margin of U.S. factories dropped directly from 62% in the country to 8%.

But even if costs soar and profits plummet, TSMC's attitude towards investment in the United States will not change. In a recent interview, it also responded to the issue of profits from building factories in the United States. TSMC said it has made steady progress in yield management.

TSMC also emphasized that as production capacity expands, it will continue to optimize operations to reduce costs, thereby achieving higher economies of scale.And help improve the U.S. semiconductor supply chain.

It can be seen that TSMC has avoided the issue of plummeting profits at U.S. factories, emphasizing that it is improving and will not change its attitude of helping the U.S. improve its semiconductor supply chain.