[News] TSMC Arizona Hit by Q3 Profit Drop; Recovery May Hinge on 2nd Fab 3nm Mass Production in 2027

As TSMC accelerates its expansion in the U.S., the performance of its American operations has drawn heightened attention. According to Commercial Times, TSMC’s U.S. subsidiary recorded NT$41 million in profit for the third quarter, a steep decline from NT$4.232 billion in the previous quarter.

Institutional investors cited by the report project that as TSMC’s second Arizona fab completes equipment installation in the second quarter of next year, depreciation and construction expenses will rise substantially, putting short-term pressure on profitability.

As the report indicates, Arizona Fab 1 quickly turned profitable after entering mass production, contributing to the parent company’s investment income. According to the Commercial Times, TSMC Arizona Fab 1 posted NT$4.232 billion in net income in Q2 2025, marking its second consecutive profitable quarter.

Institutional investors note that until Fab 2 reaches mass production, elevated costs will continue to weigh on the profitability of TSMC’s U.S. operations. The report highlights that the second Arizona fab’s 3nm production line is scheduled to begin mass production in 2027. Once the line ramps, it is expected to lift capacity utilization and become a key driver of growth for TSMC’s U.S. operations.

Within TSMC’s global advanced-process roadmap, the introduction of 3nm remains the critical factor determining whether the Arizona site can enhance its overall competitiveness, as noted by the report. TechNews notes that TSMC’s third-quarter 2025 results show that shipments from its 3nm, 5nm, and 7nm processes accounted for 23%, 37%, and 14% of total revenue, respectively. Combined, these three nodes made up 74% of TSMC’s revenue, meaning advanced processes now contribute nearly three-quarters of the company’s total sales.

Advanced Node Expansion Accelerates on Strong AI Demand

Boosted by strong orders from major customers such as NVIDIA, AMD, and Broadcom, institutional investors cited by Economic Daily News expect TSMC’s AI-related revenue to grow by multiples in 2025, putting it on track to challenge the NT$1 trillion mark. They also project continued growth into 2026, helping push TSMC’s U.S.-dollar revenue beyond the US$100 billion threshold again, with order visibility extending through 2028.

TSMC’s 2nm capacity is already in short supply. According to Economic Daily News, beyond production at its Hsinchu Baoshan and Kaohsiung fabs, customers are urging the company to ready its new U.S. facility for 2nm output as quickly as possible. To meet demand, TSMC is accelerating its plan to upgrade and expand the Arizona site to 2nm and is reportedly acquiring additional land near the current campus.

Read more

• [News] TSMC Plans Faster Shift to N2 and More Advanced Nodes in Arizona amid Soaring AI Demand
• [News] TSMC Reportedly Plans 12 New Advanced Process and Packaging Fabs in Taiwan as 2nm Supply Tightens

(Photo credit: TSMC)