May 5, 2025 /SemiMedia/ — As semiconductor giants like TSMC and GlobalWafers increase investments in U.S. manufacturing, particularly in wafer production, they are facing significant cost pressures. While the geographic positioning of these factories provides advantages in meeting customer demand, the high costs associated with building and operating these plants remain a major challenge, particularly for smaller companies. While there are expectations of future profitability from these investments, the immediate impact on profit margins due to high depreciation and amortization costs is notable.

TSMC has forecast a Q2 2025 gross margin of 58%, slightly down from the previous quarter’s 58.8%. This decline is primarily attributed to the commencement of production at its U.S.-based wafer fab, which has introduced higher operational costs and depreciation expenses. As production at its U.S. fabs increases and its Japan Kumamoto facility ramps up output, TSMC anticipates that by 2025, its overseas wafer production will contribute an additional 2-3% to its total wafer output.

The company also noted that the cost pressures from overseas fabs are particularly acute in light of the uncertain global semiconductor market environment. As TSMC continues its investments in the U.S. and other developed countries, it expects that these costs could negatively impact gross margins by 2-4% annually over the next few years.

Similarly, GlobalWafers’ new 12-inch silicon wafer plant in Texas is also facing challenges from high construction costs and depreciation, which have significantly impacted the company’s financial performance. Despite being the first 12-inch silicon wafer plant in the U.S., the new facility has contributed to one of the worst financial performances in GlobalWafers' recent history due to the heavy depreciation expenses associated with the plant’s construction.

Overall, while the U.S. manufacturing push offers strategic geographic and customer-demand advantages, semiconductor manufacturers are still grappling with how to manage costs and ramp up production to fully realize the potential of these new facilities.