TSMC delays U.S. chip plant start to 2025 due to labor shortages
Taiwan chipmaker logs quarterly net profit drop on consumer electronics slump
TAIPEI -- Taiwan Semiconductor Manufacturing Co. said it will push back the start of mass production at its plant in Arizona to 2025 due to a shortage of skilled workers and technicians needed to move equipment into the facility.
TSMC Chairman Mark Liu said the world's biggest contract chipmaker is entering a critical phase of handling and installing some of the "most advanced equipment" at the plant, its advanced first chip facility in the U.S. in more than 20 years. Mass production was previously slated to begin late next year.
"We are encountering certain challenges, as there is an insufficient amount of skilled workers with the specialized expertise required for equipment installation in a semiconductor-grade facility," Liu said. He added that TSMC is sending experienced technicians from Taiwan to make up for delays and the lack of trained local workers, confirming a Nikkei Asia report last month.
Construction of the Arizona plant began in mid-2021.
"We expect the production schedule of N4 process technology to be pushed out to 2025," the chairman said, referring to 4-nanometer chipmaking technology.
TSMC, which serves global chip developers including Apple, Qualcomm and Nvidia, is seen as a barometer of the wider tech industry. On Thursday, the company again revised its full-year outlook downward, citing a slow recovery in China and prolonged macroeconomic uncertainties. It now expects a 10% decline in revenue from 2022. In April, it trimmed its annual revenue target from mild growth to a "low-to-mid single digit percent" decline.
The chipmaker also reported its first drop in quarterly net profit since 2019 on Thursday amid a slump in the consumer electronics market.
Revenue for the April-June quarter was 480.84 billion New Taiwan dollars ($15.68 billion), the lowest in five quarters and a decline of 10% from a year ago. Net profit was NT$181.80 billion, down 23.3% on the year.
"It's all about macroeconomics. In fact, higher inflation and interest rate [hikes] impact demand in all market segments in every region in the world. ... China's economic recovery is also slower than we expected," said C.C. Wei, CEO of TSMC. "While we have recently observed an increase in AI-related demand, it is not enough to offset the overall cyclicality of our business."
Apart from its AI-related business, TSMC expects weakness in other areas in the second half of the year, the CEO said.
The Taiwanese chipmaker also predicted a lukewarm current quarter, with revenue of between $16.7 billion and $17.5 billion, a decline of about 15.4% at the midpoint from last year.
TSMC said planned capital expenditure for this year will remain between $32 billion and $36 billion, but said the spending will be "toward the lower end of the range." Last year’s capex was $36.2 billion.
Despite the prolonged downturn in consumer electronics, TSMC is benefiting from the boom in generative artificial intelligence led by ChatGPT, the AI-powered chatbot able to generate humanlike responses to user prompts. AI computing requires the powerful graphics processors made by Nvidia and Advanced Micro Devices (AMD), both of which are key TSMC clients.
AMD CEO Lisa Su, who is in Taipei this week to visit clients and suppliers, told reporters on Wednesday that AI will be the most important growth driver for the next few years.
"AI is in the birth stage of a very large growth, [and is] a key area of investment for us," Su said. "We believe over the next three to four years the [total addressable market] can be over $150 billion."
TSMC is the sole manufacturer of AMD's powerful MI300 platform for high-performance computing and large cloud computing -- its answer to Nvidia's H100. Su said AMD will continue to work with the Taiwanese contract chipmaker for its next-generation product.
Nvidia CEO Jensen Huang has also said TSMC will remain the company's sole supplier for the H100 processor due to the technological barrier and its deep partnership with the Taiwanese chipmaker.
Mark Li, an analyst at Bernstein Research, said in a research note that TSMC may benefit from iPhone processor orders in the current quarter and should see more obvious demand related to AI in the last quarter of 2023.
"A surge in AI orders arrived late in the first quarter and early in the second quarter," Li said, adding that "It will take nearly six months to turn [those orders] into revenue." However, he noted that demand from PCs, Android smartphones and other consumer electronics is still softer than expected, which has dragged on TSMC's revenue this year.