TSMC’s Arizona fabs become its most profitable overseas unit

TSMC's Taiwan Semiconductor Manufacturing Company Limited ↘ 4.16% Arizona operations have emerged as the company's most profitable overseas subsidiary, generating NT$36.066 billion (approximately $1.13 billion) in profit during the first half of 2026 — a 662.8% increase from the same period a year earlier and more than double the entire fiscal year 2025 total of NT$16.1 billion.trendforce+1

The results, disclosed in TSMC's 1H26 interim report and first reported by Taiwan's Commercial Times and Economic Daily News, mark a turning point for the chipmaker's global expansion strategy as surging demand for advanced AI processors fills capacity at the Arizona campus.trendforce

Overseas Units Post Record Combined Earnings

Across its four major overseas manufacturing subsidiaries, TSMC generated a combined NT$58.529 billion in profit during the first half, up 215.4% year-over-year. Arizona alone contributed more than 60% of that total, overtaking TSMC Nanjing as the most profitable foreign operation.trendforce

TSMC Nanjing ranked second with NT$14.978 billion in 1H26 profit, while JASM, the company's 73%-owned Japan subsidiary, turned profitable for the first time this year after posting losses in 2025, earning NT$951 million in Q1 and NT$727 million in Q2.trendforce

Depreciation Clouds the Outlook

Despite the headline surge, Arizona's quarterly trajectory showed signs of moderation. Second-quarter profit slipped 8.2% sequentially to NT$17.259 billion as depreciation expenses from the facility's ramp-up weighed on margins. CFO Wendell Huang warned during TSMC's July earnings call that overseas expansion would dilute gross margins by two to three percentage points initially, widening to three to four points as fabs mature.marketscale+1

TSMC's first Arizona fab entered 4nm mass production in the fourth quarter of 2024, and a second fab focused on 3nm is slated to ramp in the second half of 2027. Construction of a third fab began in May, targeting 2nm production around 2028. With total planned U.S. investment now at $265 billion — one of the largest private infrastructure commitments in American history — analysts are watching closely whether the aggressive build-out can sustain profitability as depreciation costs mount and construction of subsequent fabs accelerates.trendforce+2