Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), announced that the start of operations at its production plant in Arizona, USA, originally scheduled for next year, will be delayed until 2025. This is due to the unexpected challenge of a shortage of skilled local workers. Following the disclosure of weak second-quarter results, TSMC also forecasted a 10% decline in annual sales for this year.
According to the Wall Street Journal (WSJ) and others on the 20th (local time), TSMC Chairman Mark Liu stated at the second-quarter earnings announcement, "Due to a shortage of skilled labor, semiconductor production at the Arizona plant will be postponed until 2025." He explained, "TSMC is facing several issues in the U.S. There is a lack of skilled workers with the necessary expertise," adding, "We are working to improve this by dispatching technical personnel from Taiwan to the U.S."
Originally, TSMC planned to invest $40 billion in the Arizona production facility and start mass production of 4-nanometer chips at the first phase of the plant from 2024. Furthermore, from 2026, it intended to produce 3-nanometer semiconductor chips at the second phase of the facility. However, recently, the shortage of skilled workers capable of handling cutting-edge customized equipment during the plant construction process has surfaced, leading to growing speculation that mass production within 2024 would be difficult.
On the same day, Chairman Liu also mentioned that TSMC is awaiting the final subsidy and tax credit proposals from the Biden administration related to the local semiconductor facility. Since the costs involved in building the plant in Arizona are reported to be at least 50% higher compared to Taiwan, government subsidies from the U.S. are essential. It is known that Chairman Liu has repeatedly conveyed this position to the U.S. government.
TSMC is considered a representative company at the center of the Biden administration's efforts to restructure the semiconductor supply chain with a focus on domestic production. President Biden himself attended the equipment import ceremony held last December. WSJ reported, "The U.S. has been attempting to build a semiconductor supply chain centered on allies such as South Korea and Japan amid deteriorating relations with China."
With the delay in the Arizona plant's operation, plans by iPhone manufacturer Apple, which intended to use 'Made in USA' semiconductors produced at this plant, are inevitably disrupted. Currently, most of the latest chips Apple receives from TSMC are produced locally in Taiwan. Peter Wennink, CEO of ASML, told Bloomberg News, "Securing the necessary technology and skilled workers is a difficult task," pointing out that politicians are underestimating the complexity of building new semiconductor production facilities.
TSMC's second-quarter results, released on the same day, showed a decline. Second-quarter revenue was NT$480.841 billion, down 10% from the same period last year. Net profit fell 23.3% to NT$181.8 billion. This is the first time in about four years since the global semiconductor downturn in the first quarter of 2019 that TSMC's revenue and net profit have decreased. The weak performance is attributed to factors such as deteriorating macroeconomic conditions leading to reduced consumer demand, rising costs, and China's slow economic recovery.
Additionally, TSMC forecasted that its annual sales for this year will also decline by 10% compared to the previous year. This is a worse outlook than the single-digit decline forecast presented three months ago. TSMC CEO Wei Zhejia stated, "Everything is about the macroeconomy," diagnosing that "high inflation and high interest rates are affecting demand across all market sectors worldwide. China's economic recovery is also slower than we expected." However, he anticipated that growing demand related to artificial intelligence (AI) could partially offset these impacts.
Meanwhile, semiconductor-related stocks on the New York Stock Exchange showed a broad decline on the day due to TSMC's weak earnings outlook. Nvidia, considered a beneficiary of the AI rally, dropped nearly 4% from the previous close. AMD fell by nearly 6%. Intel and Qualcomm also saw declines exceeding 3%.
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