Taiwan Semiconductor Manufacturing Co. (TSMC), a prominent player in the Semiconductors & Semiconductor Equipment industry, has announced a delay in the commencement of operations at its Arizona chip factory until the first half of 2025. The semiconductor giant revealed this during its third quarter earnings call. The delay is primarily due to a lack of specialist workers, an issue that has intensified in the semiconductor industry due to immigration challenges. This is despite TSMC's impressive gross profit margins, as noted by InvestingPro, with a margin LTM2023.Q2 of 58.63%.
The company's CEO, C.C. Wei, highlighted the progress made on fab infrastructure and resolution of equipment installation issues. He also noted the "early preparation" for operations and improvement in the first fab's situation. Two fabs are currently under construction in north Phoenix, with significant governmental backing and burgeoning relationships with local trade and union partners.
In an effort to address the workforce shortage, TSMC plans to send Taiwanese technicians to train local workers on N4 process technology. This is in line with one of the InvestingPro Tips, which states that TSMC yields a high return on invested capital. The current market cap of TSMC stands at 445.74B USD. However, current US immigration laws present significant barriers for international students holding advanced degrees in semiconductor-related fields who wish to remain in the country after graduation.
Todd Schulte, president of the immigration and criminal justice reform advocacy organization FWD.us, emphasized the importance of immigration reform for the future of the US semiconductor industry in an interview with Yahoo Finance. His organization's research found that about 5,000 such students will graduate next year and at least 4,000 are interested in staying in the US to work on semiconductor fabs.
Despite these challenges, TSMC has already hired about 1,100 Phoenix-based employees and continues its construction efforts. In 2021, TSMC began building a $40 billion chipmaking facility that employs an average of 12,000 construction workers daily. According to the Business Journal, there is potential for the site to expand to six fabs for producing what could be the "most advanced chips made in the U.S." TSMC's strong performance is reflected in its P/E ratio of 14.66 and a PEG ratio LTM2023.Q2 of 0.56, as reported by InvestingPro.
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