TSMC’s US Operations Face Rising Costs as Push for Advanced Chip Manufacturing Intensifies

TSMC’s aggressive investment strategy in the United States has long been viewed as a positive step toward strengthening America’s semiconductor independence. However, new data reveals that the financial reality behind these operations is becoming increasingly challenging. According to Taiwanese outlet Ctee, TSMC’s US profitability dropped sharply quarter over quarter, falling from NT$4.232 billion to just NT$41 million. The primary cause is the enormous capital expenditure required to accelerate US based semiconductor manufacturing, especially as the company moves to introduce cutting edge nodes.

TSMC’s Arizona fabs represent critical strategic assets not only for the United States, but also for global semiconductor resilience. These facilities are intended to help diversify supply chains and reduce exposure to geopolitical tensions. One driving factor behind TSMC’s early US expansion was strong customer demand for American made chips, pressure that intensified during the Trump administration’s push for domestic manufacturing.

Yet despite these ambitions, US based fabs remain significantly more expensive to build and operate compared to Taiwan. Higher labor costs, elevated construction costs, and reliance on a technical workforce largely sourced from Taiwan have fueled rapid cost expansion.

A photo of NVIDIA and TSMC executives standing beside a “Blackwell Made in America” plaque illustrates the importance placed on domestic semiconductor production.
Image Credits: NVIDIA

Ctee’s report highlights that TSMC’s Arizona Fab 2 is expected to see a further decline in profitability due to the investment needed to support advanced nodes such as 3nm. These processes require extremely costly production tools and more complex infrastructure. While Arizona Fab 1 performed well thanks to its focus on more mature nodes, the generational leap toward AI centric technologies has reshaped customer demand. As a result, TSMC is under pressure to rapidly deploy advanced manufacturing capabilities to maintain competitiveness and satisfy its largest clients.

Manufacturing chips in the United States is inherently expensive due to labor, regulatory requirements, and talent shortages. The pursuit of bleeding edge nodes only amplifies these challenges. As TSMC scales to 3nm and beyond, these high resource demands will continue to constrain the company’s US profitability relative to its operations in other regions.

With global semiconductor competition accelerating and geopolitical forces driving governments to localize production, TSMC’s US strategy remains indispensable but financially burdensome. The company’s long term success in the United States will depend on its ability to balance advanced manufacturing needs with sustainable cost structures.

Do you think TSMC’s long term US manufacturing investment will pay off, or will escalating costs force strategic changes? Share your perspective below.