TSMC Overseas Fabs H1 2026: Arizona Profits Surge 663%, Japan Turns Profitable
nashnova research
TSMC's Arizona fab posted NT$36.07 billion in net profit for H1 2026, up roughly 663% year-on-year, while its Japan subsidiary swung to profit. The overseas buildout is shifting from cash burn to cash generation.
Arizona profit up 663% — where did the money come from?
The Arizona fab earned NT$36.07 billion in H1 2026 net profit, versus just NT$4.73 billion a year earlier.
TSMC holds 100% of the fab and booked NT$31.15 billion in investment income — about 2.44% of its H1 consolidated net profit of roughly NT$1.28 trillion.
This means → Arizona has flipped from a financial drag to a measurable profit contributor. The share is still small, but the growth rate is striking.
Why did Q2 actually dip quarter-on-quarter?
Arizona's Q2 investment income was roughly NT$14.60 billion, down about 13.6% from Q1's NT$16.91 billion.
The culprit: ongoing construction of P2 and later phases, which pile on depreciation, amortization, and operating costs.
In plain terms = the first fab is making money, but the second is still being built. Stack both ledgers together and quarterly profit gets dragged down.
Japan turned profitable, Germany still losing — what explains the gap?
Japan subsidiary JASM (TSMC stake: ~73%) lost NT$6.22 billion in H1 2025 but swung to a NT$1.68 billion profit in H1 2026. TSMC booked NT$1.22 billion in investment income.
Germany subsidiary ESMC (stake: ~70%) lost NT$693 million in H1 2026, widening from NT$689 million for all of 2025. It remains in the construction phase.
This reflects a simple timeline difference: Japan has started volume production; Germany is still installing equipment.
How are the China fabs performing?
TSMC's China subsidiary posted NT$5.81 billion in H1 net profit, roughly flat with NT$5.57 billion a year earlier.
The Nanjing fab earned NT$14.98 billion in H1 net profit; TSMC booked NT$14.90 billion in investment income.
Both fabs run mature nodes. Profits are steady but not growing — their role is "stable cash cow."
Subsidies are falling while tax breaks are rising — what does that signal?
In full-year 2025, TSMC received roughly NT$7.63 billion in combined government support from the U.S., Germany, Japan, and China. In H1 2026 that figure dropped to about NT$590 million.
Meanwhile, the investment tax credit rate applicable to the Arizona fab rose from 25% to 35%, effective January 1, 2026.
This means → the overseas fabs are transitioning from "subsidized life support" to "tax-break cost reduction." The former is one-off; the latter is recurring — a better setup for long-term margins.
What is the market watching next?
The key proof point: whether P2 and later-phase construction costs can be absorbed smoothly.
The Q2 quarter-on-quarter dip already flags this pressure — depreciation from new phases will weigh for several more quarters.
In plain terms = the story of "the first Arizona fab makes money" is established. The real test is whether profitability holds as more fabs come online.
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