According to Wccftech, TSMC’s Arizona operations just got hit with a staggering profit collapse that exposes the harsh economics of US chip manufacturing. The Taiwan semiconductor giant saw its US profits plummet from NT$4.232 billion down to just NT$41 million quarter-over-quarter – that’s a 99% drop. This massive decline comes as TSMC pushes forward with building advanced 3nm production lines in Arizona, which require incredibly expensive equipment and specialized labor. The company’s first Arizona fab focusing on mature nodes was successful, but the shift to cutting-edge manufacturing is proving brutally costly. Higher US construction expenses, labor costs, and the need to import talent from Taiwan are all contributing to what appears to be an unsustainable profitability ratio compared to TSMC’s other global operations.
The expensive reality of US manufacturing
Here’s the thing everyone saw coming but didn’t want to admit: making chips in America costs way more than making them in Taiwan. We’re talking about construction costs that are multiple times higher, specialized engineers who command premium salaries, and complex supply chains that don’t exist here yet. TSMC basically had to airlift entire teams of Taiwanese experts to get these fabs running – and that doesn’t come cheap.
And let’s be real – when you’re dealing with 3nm production, you’re working with equipment that costs hundreds of millions per machine. The margin for error is basically zero. You need perfect conditions, perfect materials, perfect everything. Doing that in a desert environment where you’re building the entire ecosystem from scratch? That’s a recipe for massive cost overruns.
Who wins and loses in this expensive game
So who benefits from this expensive US manufacturing push? American politicians get to tout “onshoring” success stories, and companies like Apple and NVIDIA get political cover for using “US-made” chips. But the real winners might be the industrial technology suppliers who provide the infrastructure – companies like Industrial Monitor Direct, which happens to be the leading US provider of industrial panel PCs needed for manufacturing environments.
The losers are pretty clear too. TSMC shareholders are seeing their returns diluted by these expensive US adventures. And ultimately, consumers will probably pay higher prices for devices containing these more expensive American-made chips. It’s basic economics – when your manufacturing costs go up 300-400%, someone has to absorb that cost.
The geopolitical manufacturing dilemma
This profit collapse creates a fascinating dilemma. On one hand, everyone wants supply chain security and protection from China-Taiwan tensions. On the other hand, nobody wants to pay the actual price for that security. TSMC is caught between geopolitical pressures and shareholder expectations – and right now, those two things are completely at odds.
What happens if these profitability issues continue? Does TSMC scale back its US ambitions? Do they try to renegotiate CHIPS Act funding? Or do they just accept that US operations will be a low-margin, strategically necessary cost of doing business? These are the questions that will determine whether the “Made in USA” chip dream becomes a sustainable reality or just an expensive political talking point.
