Taiwan Semiconductor Manufacturing Co.'s (TSMC) $40 billion Arizona plant, a crucial part of the US CHIPS Act, is grappling with significant challenges, including cost overruns and a delayed production timeline that now stretches into 2025. The project's original goals, which included bolstering American employment, are now under scrutiny as reports reveal that nearly half of the plant's workforce originates from Taiwan.
Chair Mark Liu has described the Arizona venture as a "first trial" for TSMC's overseas expansion. The facility, designed to mirror Taiwan's Tainan Fab 18, aims to produce 60,000 wafers per month. The construction costs have turned out to be significantly higher than anticipated.
According to InvestingPro data, TSMC has a market capitalization of $425.12 billion and a P/E ratio of 14.21, indicating that the company is trading at a low price relative to its earnings. This is also supported by an InvestingPro tip that states TSMC is trading at a low P/E ratio relative to near-term earnings growth.
The workforce composition at the plant has also raised eyebrows. Among the staff members is U.S.-trained engineer Mino Morgese from Taiwan. The high proportion of Taiwanese employees has ignited skepticism about TSMC's commitment to creating jobs for US workers, adding another layer of complexity to this high-stakes project.
InvestingPro data reveals that the company has experienced a revenue growth of 18.64% and a gross profit of $41925.03 million, indicating a strong financial performance. An InvestingPro tip further underscores that TSMC operates with a high return on assets, which is also reflected in the company's return on assets standing at 20.34%.
Questions also persist about the quality of chips that will be produced at this new facility. These doubts, coupled with the cost overruns and delays in production timeline, have cast a cloud over this integral part of the US CHIPS Act. Yet, TSMC remains a prominent player in the Semiconductors & Semiconductor Equipment industry, as highlighted by an InvestingPro tip. With a total of 21 additional tips listed on InvestingPro, investors can gain further insights into the company's performance and potential by accessing InvestingPro's premium features.
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