tsmc's tale of two fabs: nanjing soars, arizona struggles

2025-04-22 tsmc

taipei, Tuesday, 22 April 2025.
tsmc’s latest financials paint a stark contrast. The nanjing plant in China is booming, generating nearly 26 billion yuan in profit. Meanwhile, the arizona facility continues to bleed money, with losses mounting to 14.3 billion yuan. This divergence highlights challenges in tsmc’s global expansion, particularly in managing costs and production efficiency across different regions. The american plant has accumulated losses of 39.4 billion yuan over the last four years.

Financial performance contrast

TSMC’s 2024 annual report reveals a significant disparity in the financial performance of its overseas ventures [1]. The Nanjing plant generated a profit of 25.954 billion yuan, surpassing the 21.755 billion yuan profit in 2023 [1]. In contrast, the Arizona plant incurred a loss of 14.298 billion yuan, which is an increase from the 10.924 billion yuan loss in 2023 [1][2]. The japanese plant also experienced losses of 4.375 billion yuan, while the european plant had losses of 556 million yuan [1]. These figures underscore the challenges TSMC faces in achieving consistent profitability across its global manufacturing network [1].

Impact on tsmc’s stock

The financial report has stirred debate in Taiwan, particularly regarding TSMC’s continued investment in the U.S. despite ongoing losses [4]. As of April 21, TSMC’s stock price dropped by 15 yuan to 835 yuan, a decline of 1.79% [4]. Concerns are rising about the potential outflow of advanced technology and the increasing reliance on the U.S., which could impact TSMC’s competitive edge [1]. The contrasting performance of the Nanjing and Arizona plants raises questions about the efficiency and cost-effectiveness of TSMC’s overseas expansion strategy [2].

Manufacturing capacity and geopolitical considerations

TSMC’s strategic decision to expand its manufacturing footprint in the U.S., driven by customer demand, aims to establish a self-sufficient advanced semiconductor manufacturing hub [2]. TSMC plans for approximately 30% of its 2nm and more advanced process capacity to come from the Arizona fabs [2]. However, challenges such as rising costs, supply chain disruptions, and labor shortages could hinder construction timelines and impact production efficiency [1]. These factors, coupled with geopolitical tensions, add complexity to TSMC’s global operations and its ability to maintain market leadership [7].

Expert views and future outlook

TSMC Chairman Wei Zhejia remains optimistic about the company’s growth prospects, driven by sustained demand for AI-related technologies [1]. TSMC is actively using AI to enhance productivity, efficiency, and quality across its operations [1]. However, the Economic Daily in Taiwan suggests that increased investment in the U.S. could lead to higher costs, reduced efficiency, and a decline in overall gross profit margins [1]. The report also notes that capital expenditure for the U.S. facilities may surpass that of Taiwan, potentially increasing the risk of technology transfer and dependence on the U.S. [1].

Bronnen

financial performance overseas operations