tsmc's arizona struggles: losses deepen despite production ramp-up

2025-04-21 tsmc

Phoenix, Monday, 21 April 2025.
tsmc’s arizona subsidiary reported a loss of nt$14.298 billion in 2024. this is despite starting mass production at its first arizona wafer fab. the lag between production and revenue recognition impacted profitability. the plant has support from major clients like apple, nvidia, and amd. tsmc anticipates gross margin dilution of 2-3% annually, later expanding to 3-4%, due to overseas fab production.

Financial performance and capacity expansion

TSMC’s Arizona subsidiary, TSMC Arizona Corporation, reported a widened loss of NT$14.298 billion in 2024 [1][2]. This is an increase from a loss of NT$10.925 billion in 2023, a 30.874% increase [1][2]. Despite the financial deficit, the first Arizona wafer fab commenced mass production during the fourth quarter of last year, utilizing 4-nanometer process technology [1][2]. The second fab’s construction is complete and is currently undergoing facility installation, including cleanrooms and electromechanical engineering, with plans to adopt 3-nanometer process technology [1][2].

Strategic outlook and client support

TSMC plans for its third Arizona fab to use 2-nanometer or more advanced process technology to meet strong customer demand [1][2]. The Arizona plant has secured support from major clients, including Apple, Nvidia, AMD, Broadcom, and Qualcomm [1][2]. These commitments are expected to help the Arizona plant achieve economies of scale and reduce losses as clients ramp up production [1]. However, TSMC anticipates that overseas fab production will dilute gross margins by approximately 2-3% annually in the initial phase, expanding to 3-4% later [1][2].

Broader financial context and global operations

TSMC’s annual report revealed increased losses in its Japanese (JASM) and German (ESMC) subsidiaries [1][2]. JASM’s losses grew from NT$2.966 billion to NT$4.376 billion, while ESMC’s losses increased from NT$0.18 billion to NT$5.57 billion [1][2]. Despite these challenges, TSMC projects it will maintain a long-term gross margin above 53%, supported by a $100 billion investment in Arizona [1][2]. Recent news indicates TSMC will hold its shareholders’ meeting on June 3, with Chairman Wei Zhejia projecting 2025 to be a year of steady growth [6].

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arizona fab financial losses