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Taiwan Semiconductor Manufacturing Co’s (NYSE:TSM) Arizona factory’s substantial losses reflect the repercussions of Washington’s attempt to restructure global semiconductor supply chains through political intervention.

The chipmaker’s Arizona facility incurred a loss of ~14.3 billion New Taiwan dollars ($441 million) in 2024, marking the most significant loss since its establishment, Global Times reported, citing Economic Daily News, the contract chipmaker’s latest annual general meeting report.

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Contrastingly, the chipmaker’s factory in Nanjing, East China’s Jiangsu Province, reported 2024 revenue of nearly ~$26 billion New Taiwan dollars ($800 million).

While the U.S. excels in chip design, it lags behind Asia, especially East Asia.

The Arizona factory hugely depends on importing key components and raw materials, which drives logistics costs and extends the supply cycle. Additionally, high labor costs in the U.S. further inflate per-unit labor expenses.

Taiwan Semiconductor founder Morris Chang estimated in March 2023 that chip costs in Arizona were 50% higher than its flagship production line in Taiwan. Contrastingly, the Nanjing facility benefits from China’s efficient and stable industrial ecosystem, the report said.

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In March, Taiwan Semiconductor announced an additional $100 billion investment in U.S. chipmaking (on top of its $65 billion in April 2024).

The investment followed President Donald Trump’s verbal attacks on Taiwan “for stealing” the U.S. semiconductor business and generating massive trade deficits for Washington.

Taiwan Semiconductor’s first-quarter revenue rose 41.6% to $25.53 billion, topping the analyst consensus estimate of $23.92 billion.

The second-quarter revenue guidance predicts $28.4 billion-$29.2 billion versus the $26.79 billion analyst estimate, with strong demand for 3-nm and 5-nm technologies.

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