Arizona chip production: Inside TSMC’s Hiring Dilemma

Arizona chip production: The world’s largest contract chipmaker predicts a 10% revenue reduction in 2023 and will delay output at its Arizona factory. Taiwan Semiconductor Manufacturing Co. shares dropped over 3% on Friday. The
announcement came after the company said it will delay production at its Arizona plant.

TSMC (TSM) reported a 23% drop in Q2 net profit compared to last year. Since 2019, this is the first time the corporation’s quarterly earnings have decreased compared to the previous year.

Brady Wang, an assistant director at Counterpoint Research, sees long-term growth potential despite declining sales and earnings. TSMC’s future outlook is positive, despite the weak economy. This is because of megatrends like 5G and high-performance computing.”

TSMC’s global growth accelerates, but its Arizona plant’s production delay until 2025 due to insufficient skilled workers.

“While we work to improve the situation, including sending technicians from Taiwan to train local workers, the production schedule for N4 process technology will be pushed back to 2025,” TSMC chairman Mark Liu said.

The overall amount that TSMC has put into the US project is $40 billion.

Arizona chip production

Read More: TSMC Semiconductor Plant in Arizona: Safety and Job Growth Priorities

The company stated that being the top AI chip maker and high demand for AI isn’t sufficient due to slower global economic recovery.

“The short-term excitement about AI demand cannot be extrapolated to the long term at all.According to Liu, “We are also unable to predict how the sudden demand will persist or change in the near future, which means throughout the course of the following year.”

Despite this, the company announced earnings for the quarter that ended in June that were 5.85 billion Taiwan dollars (181.8 billion Taiwan dollars), which were more than what was expected.

The investment bank Goldman Sachs stated in a research report that “We think TSMC is set up well for strong growth in 2024.”  “We think investors are also ready for the US expansion to be put off.”

Other analysts were also optimistic about TSMC, in part because there is a lot of demand for AI, which makes up about 6% of the company’s sales right now.

Citi Research analysts said in a note, “We expect a good outlook through 2024 because it is the leader in making AI chips.”

Our Reader’s Queries

Is chip manufacturing coming to Arizona?

Taiwan Semiconductor Manufacturing Co. has updated the opening schedule for its massive semiconductor-manufacturing operations in north Phoenix. The official production launch is now set for the first half of 2025, instead of the original target of the end of 2024.

Why chip makers favor Arizona?

Arizona boasts a plethora of advantages for businesses, including vast expanses of land around Phoenix, a pleasant climate, and dependable utilities. Moreover, the state is home to the largest public university and community college system in the United States, namely Arizona State University and the Maricopa Community College system. These institutions have made significant strides in the fields of engineering, technology, and more, making them ideal partners for businesses looking to innovate and grow.

Is Intel building a chip factory in Arizona?

Intel made a big announcement in March about their plans to construct two cutting-edge chip factories at their Ocotillo campus in Chandler, Arizona. These factories will cater to the increasing demand for Intel’s products and also offer dedicated capacity for Intel Foundry Services customers.

What city is TSMC in Arizona?

In 2022, the Taiwan Semiconductor Manufacturing Company will establish its site in north Phoenix. To construct a colossal factory, the chipmaker will dispatch temporary workers to Phoenix. Meanwhile, the state and city have committed to extending a significant road near the site. This move will facilitate the smooth transportation of goods and services to and from the factory.

Leave a Reply

Your email address will not be published. Required fields are marked *