Big win for the US: Taiwan Semiconductor’s Arizona plant achieves good production yield – Taiwan Semiconductor Corporation (NYSE:TSM)

Taiwan Semiconductor Manufacturing Co., Ltd. TSM The first plant in Arizona achieved higher than expected production yields than the Taiwan facility. This is an important criterion of factory profitability.

Bloomberg reported that Rick Cassidy, head of Taiwan Semiconductor’s U.S. division, reported that the contract semiconductor maker’s Phoenix factory’s yield rate was about 400 bps higher than its domestic factories.

Previous reports indicated that production yields at Taiwan Semiconductor’s Arizona facility would match those at its Taiwan facility.

Also read: Nvidia CEO Jensen Huang admits TSMC helped fix defects in AI chips, delaying key shipments

The renewal of contracts for semiconductor manufacturers coincides with tensions over potential violations of the U.S. semiconductor embargo on China, making chipmakers more susceptible to regulatory scrutiny.

Taiwan Semiconductor has stopped shipping to customers after discovering that its chips had been delivered to Huawei Technologies Co., Ltd. Due to the US ban on semiconductors from China, Chinese companies are attempting to illegally access restricted chips.

Huawei, a leading provider of 5G network equipment, has been the focus of a technology standoff between China and the United States since the United States imposed sanctions on it in 2019 for alleged espionage, but Huawei This is denied.

Taiwan Semiconductor, a leading candidate in the U.S. CHIPS Act, has received $6.6 billion in U.S. grants, $5 billion in loans, and significant tax payments to build three manufacturing plants (fabs) in Arizona. I’m asking for a deduction.

Cassidy told Bloomberg Taiwan Semiconductor that the company may consider further expansion in the United States, subject to additional government support. At least six factories could be built in the Phoenix complex.

Taiwan Semiconductor’s Arizona facility initially suffered from labor shortages and safety issues, which delayed production schedules.

This week too Nvidia Corp NVDA Chief Jensen Huang acknowledged that the defect in the Blackwell chip was resolved thanks to long-time partner Taiwan Semiconductor.

He also confirmed that all is well with his partners and dismissed reports suggesting possible friction between the two companies.

Needham analyst Charles See expects Taiwanese semiconductors to reach $90 billion in revenue in fiscal 2024 after a strong third-quarter performance led by 3nm thanks to Apple. are. AAPL.

He expects fiscal 2025 sales to reach at least $110 billion (up from $96 billion) and profit margins to return to 60% in the second half of 2025.

Taiwan Semiconductor’s stock price has risen 126% in the past 12 months. Investors can gain exposure to the semiconductor sector through the VanEck Semiconductor ETF SMH and iShares Semiconductor ETF socks.

Price Action: TSM stock traded 2.29% higher at $202.46 at last check on Friday.

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