As overseas wafer fabs in the US, Japan, and other countries gradually enter the mass production stage, TSMC's overseas production capacity, built with huge capital investments over the past few years, is beginning to shift from "burning money" to "making money." 

The latest financial report shows that in the first half of 2026, TSMC's four overseas manufacturing subsidiaries—the Arizona fab, JASM, Kumamoto fab, Nanjing fab, and Shanghai fab—collectively earned NT$58.529 billion, a significant increase of 215.4% compared to NT$18.556 billion in the same period last year, setting a new record for the same period.

The most noteworthy among them is undoubtedly the Arizona plant in the United States.

In the first half of 2026, TSMC Arizona achieved a profit of NT$36.066 billion, a staggering 662.8% increase compared to NT$4.728 billion in the same period last year. This single company's profit accounted for over 60% of the combined profit of its four overseas manufacturing subsidiaries. Based on quarterly data, the Arizona plant's profit was NT$18.808 billion in the first quarter and NT$17.259 billion in the second quarter. Although this represents an 8.2% decrease quarter-over-quarter, the second quarter still saw a 307.8% increase compared to the same period last year.

More importantly, this signifies a shift in the profit landscape of TSMC's overseas manufacturing business.

Compared to the same period last year

Last year, TSMC's main source of profit for its overseas plants was its factories in Nanjing and Shanghai, China. However, in the first half of this year, its Arizona plant in the US jumped to first place, with profits of NT$36.066 billion, even exceeding the combined profits of the Nanjing and Shanghai plants (NT$20.784 billion).

In other words, TSMC's "profit center" for its overseas plants has begun to shift from mainland China to the US.

This shift is not simply a matter of capacity transfer; more importantly, it reflects a change in product structure.

TSMC's first wafer fab in Arizona entered 4nm process mass production in the fourth quarter of 2024, currently primarily handling advanced process manufacturing. The second fab is currently undergoing equipment installation, aiming to produce 3nm processes; the third fab began construction in 2025, and will further advance towards 2nm and more advanced processes. TSMC's latest plans also include further expanding its investment in the US to meet the strong demand from AI and HPC customers for the next few years.

This explains the rapid profit growth of the US plant.

In the past, TSMC's factories in Nanjing and Shanghai primarily handled mature and relatively mature process products. While these facilities generated stable profits due to their scale, supply chain, and manufacturing efficiency, the value per wafer differed significantly from that of advanced process technologies.

The Arizona fab, however, has been dedicated to advanced processes like 4nm and 3nm from the outset, directly catering to the needs of US customers in areas such as AI and high-performance computing. TSMC itself has explicitly stated that the Arizona fab's strategic positioning is to serve advanced process customers in applications such as smartphones, AI, and HPC.

This means that, for any foundry, what products it manufactures may be more important than where it is located.

The impact of AI demand

Especially against the backdrop of surging AI demand, the value and demand intensity of advanced process wafers are significantly higher than those of traditional mature processes. In 2025, advanced processes (7nm and below) already accounted for 74% of TSMC's total wafer sales, a further increase from 69% in 2024.

Therefore, the rapid improvement in the profitability of the Arizona plant is largely due to TSMC bringing the most valuable portion of new demand to the United States.

This also means that the previous assessment that "high construction costs, expensive labor, and incomplete supply chains in the US make it difficult for overseas wafer fabs to make money" is changing.

In fact, TSMC management has previously revealed that the yield rate of its first wafer fab in Arizona has reached a level comparable to that of major wafer fabs in Taiwan. As capacity ramp-up is completed, the cost disadvantages previously incurred by the US plant due to construction cycles, personnel training, and supply chain localization are gradually being diluted by large-scale mass production.

At the same time, policy support provided by the US government has also reduced the cost pressure on TSMC's overseas expansion to some extent.

In 2024, the U.S. Department of Commerce announced up to $6.6 billion in direct CHIPS Act subsidies to TSMC Arizona to support its over $65 billion investment in three advanced wafer fabs in Arizona.

Of course, this does not mean that manufacturing costs at U.S. fabs are lower than in Taiwan, nor can it be simply interpreted as "producing chips in the U.S. is cheaper than in mainland China." Labor, construction, and operating costs in the U.S. remain high. TSMC management has also pointed out that expanding production in the U.S. still faces challenges in terms of construction workers and infrastructure.

What is truly noteworthy is another matter:

Once high-value advanced process capacity reaches scale in the U.S., even with higher manufacturing costs, wafer fabs can still achieve substantial profits as long as the product value is high enough and customer demand is strong enough.

From this perspective, the rapid profitability of the Arizona fab, to some extent, reflects the concentration of AI industry chain value in advanced manufacturing.

Besides U.S. fabs, JASM in Japan is also showing significant improvement.

JASM's Kumamoto Fab 1 has resumed normal production after the earthquake, with capacity returning to pre-earthquake levels. In the first half of 2026, JASM achieved a profit of 1.678 billion yuan, compared to a loss of 6.222 billion yuan in the same period last year, marking its first profit in the first half of the year. Profits in the first and second quarters were 951 million yuan and 727 million yuan respectively, achieving profitability for two consecutive quarters. TSMC recognized 1.219 billion yuan of JASM's profit in the first half of the year based on its shareholding ratio.

In contrast, TSMC's mainland China factories maintained stable profitability.

Specifically, TSMC's Nanjing plant achieved a profit of 14.978 billion yuan in the first half of 2026, with 7.589 billion yuan in the first quarter and 7.389 billion yuan in the second quarter, making it the second largest source of profit among its four major overseas plants, second only to the Arizona plant in the United States.

This change reveals a very interesting phase in TSMC's overseas manufacturing landscape:

Mainland China plants are contributing stable cash flow, while US plants are becoming new profit growth drivers, Japanese plants are beginning to turn a profit, and German plants are still in the investment and construction phase.

The US plants, in particular, have seen a rapid increase in profit, from initial massive capital investment to now exceeding 36 billion yuan in a single half-year, far exceeding market expectations. This may be a key reason why TSMC continues to increase its investment in the United States.

In July 2026, TSMC management stated that based on strong, multi-year AI demand from its customers, the company plans to further expand its investment in the United States, reaching a total scale of US$265 billion, and plans to build more wafer fabs, advanced packaging facilities, and R&D centers.

From a business perspective, this is no longer simply about "setting up factories overseas," but rather about gradually replicating TSMC's advanced manufacturing system in the United States and building a new manufacturing cluster around AI.

For TSMC, overseas manufacturing is transitioning from strategic deployment to profit realization; and for the global semiconductor industry, what is even more noteworthy is that as AI demand continues to concentrate on advanced processes, the profit center of global wafer manufacturing may increasingly be redistributed around advanced processes and advanced packaging.

Source: Economic Daily

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