As Taiwan Semiconductor Manufacturing Company (TSMC) hastens the operation of its factory in Arizona, United States, in response to the tariff policies of the Trump administration, concerns over deteriorating profitability due to manufacturing costs and large-scale additional investments have been raised. Samsung Electronics' foundry division is also scheduled to commence operations at its Taylor, Texas, factory next year, raising calls for measures to improve profitability.
According to TSMC's business report on the 21st, the TSMC Arizona corporation has recorded a cumulative loss of NT$39.452 billion (approximately 1.7248 trillion won) over four years. Despite commencing operations in the fourth quarter of last year, Arizona plant No. 1 logged a record operating loss of NT$14.298 billion (approximately 623.9 billion won) due to labor costs and other factors. The operating losses recorded in 2021, 2022, and 2023 were NT$4.81 billion (approximately 209.9 billion won), NT$9.43 billion (approximately 411.5 billion won), and NT$10.924 billion (approximately 476.7 billion won), respectively.
TSMC has begun operating its factory in the United States, but concerns about declining profitability persist. This is primarily because labor costs are higher compared to Taiwan, and significant additional large-scale facility investments are on the horizon. After the announcement of the tariff policy, TSMC CEO C. C. Wei met with President Trump on December 3 and announced an additional investment plan of $100 billion (approximately 145.9 trillion won). TSMC plans to invest approximately $165 billion (approximately 239 trillion won) for the construction of its Arizona factory. TSMC stated during its earnings conference call that it would expedite the completion of the expansion of its second U.S. factory to the second or third quarter and that it plans to commence construction of the third and fourth factories within the year.
The Taiwan Economic Daily reported that "producing semiconductors in the United States incurs excessive expenses," noting that "this year marks the first year of full-scale mass production, but whether losses can be reduced while continuing large-scale investments remains uncertain."
The fact that TSMC's Arizona factory has a higher proportion of advanced processes with relatively expensive production costs is also believed to be a factor hindering profitability. TSMC stated that it plans to produce 30% of its next-generation 2nm process in the United States. It is reported that major local corporations such as Apple, Nvidia, and AMD have requested TSMC to expand its production capacity in Arizona due to concerns over rising manufacturing costs from the impact of tariffs. Products like AMD's next-generation central processing units (CPUs), scheduled for release next year, will be produced using the 2nm process at TSMC's Arizona factory. In the case of advanced foundry processes, initial input costs inevitably tend to be high due to the use of expensive equipment, materials, and components compared to mature processes.
Meanwhile, it has been reported that Samsung Electronics' foundry division is also grappling with concerns over deteriorating profitability due to the operation of its U.S. production base. In 2021, Samsung Electronics announced plans to build an advanced foundry production line in Taylor, Texas, with an investment of $17 billion (approximately 24.2 trillion won). The company intends to commence operations at the production facility by the end of next year. However, unlike TSMC, which has secured major customers like Apple and AMD with significant order volumes, Samsung Electronics has been struggling to gain orders.
An industry representative noted, "Currently, Samsung Electronics is facing the greatest profitability burden ahead of operating its U.S. production line," adding, "While establishing a local production base is advantageous for securing orders from big tech under the U.S. tariff policy, there have been no order updates, raising concerns over deteriorating profitability."