TSMC Arizona fab turns profitable

Taiwan Semiconductor Manufacturing Co.'s Arizona operation has moved into the black, giving the U.S. chip reshoring effort a financial milestone after years of warnings that overseas fabs would struggle to make money. TSMC's Arizona subsidiary reported a net profit of $150.1 million in the first half of 2025, compared with a net loss of $143.4 million a year earlier, according to a recent financial statement cited by the Arizona Technology Council. Phoenix is now central to TSMC's U.S. buildout. The company says its first fab started high-volume production on N4 process technology in the fourth quarter of 2024, while the second fab's structure was completed in 2025 and is targeted for N3 volume production in the second half of 2027. TSMC says its Arizona investment has expanded from $12 billion to $165 billion and now includes plans for six wafer fabs, two advanced packaging facilities and an R&D team center. (aztechcouncil.org) ### How did the Arizona fab get profitable sooner than many expected? TSMC's first Arizona fab entered high-volume production in late 2024, using N4 technology with yield comparable to its Taiwan fab, the Arizona Technology Council said, citing the company's financial statement. That matters because yield — the share of usable chips per wafer — is one of the clearest drivers of foundry economics. (tsmc.com) Government support also helped. TSMC's financial statement showed the company received $2.21 billion in subsidies from the United States, Germany, Japan and China in the first half of 2025, up from $262.7 million a year earlier, and said those funds were used to offset property, plant and equipment costs as well as some construction and production expenses. (aztechcouncil.org) ### Why are Arizona-made chips being described as a "lifeline"? KJZZ reported on May 18 that Eyck Freymann, a Hoover Fellow at Stanford University, said Taiwan produces 90% of the world's advanced semiconductors and 99% of the most cutting-edge chips used to train the next generation of advanced AI models. Freymann said the world has no strategic reserve of those chips and that losing Taiwan supply would set back high-tech industries by "basically a generation." (aztechcouncil.org) Freymann told KJZZ that TSMC's expansion in Phoenix is "a major geopolitical bet" by the United States, Taiwan and TSMC to reduce dependence on Taiwan-based production. He added that the effort requires "an incredibly specialized workforce" because the devices are among the hardest in the world to manufacture. (kjzz.org) ### Where does Intel fit into the same story? Intel CEO Lip-Bu Tan said on CNBC on May 18 that the company's foundry turnaround is gaining traction as manufacturing yields improve and outside customer interest grows. Tan said Intel expects commitments from multiple foundry customers in the second half of 2026 and described foundry as "one of the key national treasures." (kjzz.org) Tan also said Intel's 18A process had improved faster than expected, with monthly yield gains running above the 7% to 8% best-practice range he cited. CNBC reported that investors have been watching whether Intel can make its manufacturing competitive with TSMC as part of its turnaround. ### What does this change in Arizona on the ground? (cnbc.com) TSMC says more than 3,000 employees already support its Arizona manufacturing operation in Phoenix. The company says the first three Arizona fabs are expected to create 6,000 direct high-tech jobs, while the Greater Phoenix Economic Council estimates more than 140,000 metro-area jobs are in semiconductor-relevant occupations. (cnbc.com) KJZZ reported that TSMC bought more land in north Phoenix in January and that a mixed-use community called Halo Vista is planned across more than 2,000 acres near the site. Banner Health has also bought nearly 19 acres nearby, according to the station. TSMC says the next milestone is second-half 2027 volume production at its second Arizona fab on N3 technology, while the third fab is slated for N2 and A16 processes by the end of the decade. (tsmc.com) Intel, meanwhile, says it expects commitments from multiple foundry customers in the second half of 2026. (kjzz.org)