[News] TSMC Arizona Profit Soars 663% YoY in 1H26; U.S. Earnings Pull Back 8.2% QoQ in 2Q as Depreciation Bites
As TSMC’s Arizona fabs ramp up to meet strong demand from NVIDIA and other Big Tech customers, the U.S. unit has overtaken TSMC Nanjing as the foundry giant’s most profitable overseas subsidiary. Citing TSMC’s 1H26 interim report, Commercial Times and the Economic Daily News report that TSMC Arizona posted a record NT$36.066 billion profit in 1H26, up 662.8% YoY.
As TSMC’s overseas footprint moves into a profit-harvesting phase, its four major manufacturing subsidiaries generated a combined NT$58.529 billion in 1H26, up 215.4% YoY. TSMC Arizona alone contributed more than 60% of the total, underscoring its growing weight in TSMC’s overseas earnings mix, as highlighted by the Economic Daily News.
Arizona Fab Profit Pulls Back QoQ as Depreciation Pressure Mounts
However, the Arizona profit surge showed signs of moderating in Q2. Its profit slipped 8.2% QoQ to NT$17.259 billion, even as it remained up a hefty 307.8% YoY, according to the Economic Daily News. Commercial Times further notes that TSMC recognized about NT$14.603 billion in investment income from its U.S. fab in the second quarter, down 13.6% from NT$16.909 billion in the first quarter.
Analysts cited by Commercial Times pointed out that as construction of subsequent fabs accelerates, higher depreciation and amortization expenses could put pressure on profitability.
TSMC has already warned that the overseas fab ramp-up will weigh on margins. CFO Wendell Huang said at the July earnings call that overseas expansion is expected to dilute gross margin by 2–3 percentage points in the early stages, widening to 3–4 points as the fabs mature.
As highlighted by Commercial Times, TSMC’s first Arizona fab entered 4nm mass production in 4Q24, while the second, focused on 3nm, is slated to ramp in 2H27. With the latest $100 billion investment, total planned U.S. investment has reached $265 billion, with the Arizona site ultimately expected to house 10 fabs and two advanced packaging facilities, according to MoneyDJ. How this aggressive expansion will impact profitability remains a key watchpoint.
Nanjing, JASM Profits Ease as Overseas Earnings Face New Tests
TSMC’s Nanjing fab remained a key profit driver, posting NT$14.978 billion in 1H26 and ranking second among its four major overseas operations. However, Q2 profit edged down to NT$7.389 billion from NT$7.589 billion in Q1, according to Economic Daily.
Meanwhile, JASM’s earnings also cooled slightly in Q2. As noted by Commercial Times, the Japan subsidiary, 73%-owned by TSMC, turned profitable this year after posting a loss in 2025, earning NT$951 million in Q1 and NT$727 million in Q2.
The bigger question now is whether JASM can keep that momentum after the July 7.1-magnitude Kumamoto earthquake. Commercial Times notes. The fab has resumed normal production and passed structural safety checks, but equipment requalification, calibration and wafer losses could reportedly weigh on Q3 results.
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(Photo credit: TSMC)
