No. of Recommendations: 2
In an earnings call last month, TSMC said the U.S. construction could be at least four times the cost in Taiwan, driven by labor expenses, permits, regulatory compliance and inflation. Wendell Huang, TSMC's chief financial officer, said the American investment could hurt TSMC's profitability this year.
'TSMC recognizes that there is a cost gap between fabs in Taiwan and those overseas,' Ms. Kao said, using shorthand for a fabrication plant, or factory. She added that the company still anticipated robust gross margins over the long term.
TSMC also needs suppliers close by to provide the Arizona plant with raw materials, equipment and critical parts. Yet some suppliers that are trying to join it there said they were experiencing labor challenges and high costs.
'TSMC's investment in the U.S. from a business perspective makes no sense at all,' said Kirk Yang, chairman of the private equity firm Kirkland Capital and a former tech analyst, citing lofty costs. He added that TSMC might have been forced to set up a factory in the United States because of political considerations, but 'so far, the Phoenix project has yielded very little benefit for TSMC or Taiwan.'
https://www.nytimes.com/2023/02/22/technology/tsmc...Maybe Buffett or T&T had second thoughts on their investment because of the challenges and costs of TSMC's US expansion. TSMC should have resisted calls to invest in US like the oil industry have done.
