TSMC's overseas manufacturing subsidiaries posted a combined profit of NT$58.529 billion (approximately $1.839 billion) in the first half of 2026, a remarkable 215.4% surge from NT$18.556 billion during the same period last year, according to the company's semi-annual financial report released on August 17. This marks a record high for the period. The four major overseas manufacturing arms include TSMC Arizona, which operates the company's Arizona wafer fabrication facilities; Japan Advanced Semiconductor Manufacturing (JASM), which runs the Kumamoto joint venture; ESMC, which manages the Dresden joint venture in Germany; and the Nanjing and Shanghai operations in China.

The combined first-quarter profit for these four overseas subsidiaries stood at NT$30.173 billion, while second-quarter profit reached NT$28.355 billion. Although second-quarter earnings declined 6% sequentially, they still surged 128% year-over-year. For the entire first half of 2026, the four subsidiaries generated NT$58.529 billion in combined profit, a 215.4% increase compared to the prior year.

Breaking down the figures, TSMC Arizona reported first-half profit of NT$36.066 billion (approximately $1.133 billion), skyrocketing 661% from NT$4.728 billion in the same period last year. TSMC's recognized investment income from this subsidiary reached approximately NT$31.151 billion (about $979 million), up 589.8% from NT$4.516 billion previously. This contribution represents roughly 2.44% of TSMC's total after-tax net profit of NT$1.28 trillion for the period, indicating that the operational benefits of the first US fab are gradually materializing as it enters volume production. Notably, TSMC recognized NT$14.603 billion in investment income from TSMC Arizona in the second quarter, a 13.6% decrease from NT$16.909 billion in the first quarter. Analysts suggest that as factory construction accelerates, depreciation and amortization costs will continue to pressure profitability.

Japan's JASM, in which TSMC holds a 73% stake, achieved break-even status during the first half of 2026. In fiscal 2025, TSMC's cumulative investment in JASM reached NT$68.384 billion, with losses of NT$9.767 billion. However, JASM recorded profits of NT$951 million in the first quarter and NT$727 million in the second quarter, bringing total first-half earnings to NT$1.678 billion. Based on its ownership stake, TSMC recognized NT$1.219 billion in profit from JASM during the period. Nonetheless, the magnitude 7.1 earthquake that struck Kumamoto Prefecture on July 28 prompted JASM to evacuate personnel under emergency procedures. Although structural inspections confirmed safety and production has gradually resumed, the re-inspection and calibration of production equipment, along with losses from scrapped wafers, will be critical factors affecting JASM's third-quarter profitability sustainability.

Regarding Germany's ESMC, TSMC has received strong commitments from the European Union and German federal, state, and municipal governments. Construction of the first specialty wafer fab in Dresden is progressing on schedule, with volume production timing to be determined based on customer demand and market conditions. In 2025, TSMC invested NT$38.222 billion in ESMC, which recorded losses of NT$689 million. During the first half of 2026, ESMC remained in the early construction phase and continued to incur losses of NT$485 million.

For the Chinese mainland operations, both the Nanjing and Shanghai facilities maintained stable profitability as TSMC did not add new capacity or upgrade technology. The Nanjing fab posted first-quarter profit of NT$7.589 billion and second-quarter profit of NT$7.389 billion, bringing first-half cumulative earnings to NT$14.978 billion, making it the second-largest profit contributor among the four overseas subsidiaries. The Shanghai fab generated NT$5.806 billion in profit during the first half of the year.

In summary, TSMC's Arizona wafer fab has become the primary profit engine among its overseas manufacturing bases. The first fab in Arizona began volume production using 4nm process technology in the fourth quarter of 2024, while the second fab, focused on 3nm technology, has accelerated its volume production timeline to the second half of 2027. The third fab, targeting the more advanced 2nm process, completed its topping-out ceremony in May of this year. Additionally, subsequent phases including P4, P5, and P6 are already in the planning stages, aimed at A16 and even more advanced process nodes.

It is worth noting that during TSMC's second-quarter earnings call in July, the company announced an additional $100 billion investment in Arizona, planning to build four more wafer fabs and an advanced packaging facility to meet the long-term demand from American AI, smartphone, and high-performance computing customers. This brings TSMC's total US investment to $265 billion. Against the backdrop of sustained growth in advanced process capacity demand driven by the AI boom, TSMC's revenue and profit from its US operations are expected to continue expanding as the Arizona fabs proceed with construction and production ramp-up. Of course, should AI investment experience a severe downturn in the future, TSMC's US facilities could face losses, requiring the company to carefully calibrate its subsequent fab construction and production schedules based on market trends.

Additionally, the semi-annual report reveals that subsidiaries including TSMC Arizona, ESMC, JASM, and TSMC Nanjing all received government subsidies. In the first half of 2026, these totaled NT$590 million, significantly lower than the NT$67.128 billion recorded during the same period last year.