Taiwan Semiconductor Manufacturing Co (NYSE:TSM) posted its first profit from its Arizona unit, bearing testimony to its moat even as Samsung (OTC:SSNLF) and Intel (NASDAQ:INTC) step up efforts to chip away at its dominance.
The Taiwanese contract chipmaker’s Arizona arm turned profitable for the first time in 2025. This milestone comes as Samsung expands in packaging and Intel seeks government backing to challenge the Taiwanese giant.
Taiwan Semiconductor reported its first-ever profit from its Arizona subsidiary in the first half of this year, marking a turnaround four years after the unit began operations, according to a company financial filing.
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The chipmaker’s Arizona arm generated 4.52 billion New Taiwanese dollars ($150.1 million) in net profit, reversing a loss of 4.34 billion New Taiwanese dollars from a year earlier. The company credited the improvement to robust market demand and higher factory utilization, the Taipei Times reported on Wednesday.
Arizona’s operations serve major clients such as Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), and Advanced Micro Devices (NASDAQ:AMD).
Its first fab, which started mass production in late 2023, uses 4-nm process technology, while a second fab is set to ramp up production soon with advanced 3-nm chips.
Meanwhile, Taiwan Semiconductor’s Japanese subsidiary, Japan Advanced Semiconductor Manufacturing (JASM), widened its first-half loss to 4.52 billion New Taiwanese dollars from 1.48 billion New Taiwanese dollars a year earlier.
Taiwan Semiconductor holds a 73% stake in the Kumamoto-based venture. The first fab began production late last year, and a second fab will likely break ground later this year.
Taiwan Semiconductor stock gained 18% year-to-date, topping the PHLX Semiconductor Index’s (which includes Taiwan Semiconductor) 14% returns. However, it is not all hunky dory for the contract chipmaker as its rivals remain engaged in initiatives to gain ground.
Samsung committed 25 billion yen ($170 million) to build an advanced chip packaging R&D center in Yokohama, Japan. Taiwan Semiconductor dominates the market with a 35.3% share, with Samsung holding just 5.9%. Samsung aims to strengthen ties with Japanese suppliers and the University of Tokyo as it expands in packaging.
Analyst Ming-Chi Kuo called Samsung’s recent $16.5 billion Tesla (NASDAQ:TSLA) AI6 contract a “valuable opportunity” that enhances Tesla’s chip design leverage despite Samsung’s lower 2-nm yield.
Intel got a boost from reports indicating the Trump administration is taking a stake in the struggling chipmaker following a meeting with CEO Lip-Bu Tan. Intel also secured a $2 billion investment from SoftBank (OTC:SFTBF) (OTC:SFTBY), which bought newly issued shares at $23 each, becoming the company’s sixth-largest shareholder with just under a 2% stake.
Despite $8.5 billion in subsidies, Intel lost $18.8 billion in its foundry unit last year, faces yield problems with its 18A process, and is battling executive departures, job cuts, and delays that push its Ohio fab into the 2030s.
Taiwan Semiconductor is countering with aggressive expansion. It is planning four new fabs and targeting mass production of 2-nm chips by 2028. Fab 25 is projected to deliver 50,000 wafers monthly.
The filing also revealed that Taiwan Semiconductor received 67.13 billion New Taiwanese dollars in government subsidies in the first half of 2025, up from 7.96 billion New Taiwanese dollars a year ago. Subsidies came from the United States, Germany, Japan, and China, and were used to offset property, plant, and equipment costs, as well as construction and production expenses. The company noted it is also eligible for a 25% investment grant on qualified projects.
Price Action: TSM stock is trading lower by 1.16% to $230.00 premarket at last check Wednesday.
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