Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest semiconductor manufacturer, announced in July that it’s pushing back the production start date at its Arizona chip factory by a year due to a shortage of skilled labor. The delay marks a setback in the company’s ambitious plans for its first Arizona fab, which started construction in April 2021.

TSMC had projected to kick-start its N4 semiconductor processing in Arizona by 2024. However, a scarcity of workers capable of installing specialized equipment has created roadblocks. The factory, currently under construction in North Phoenix, is now set to begin production in 2025.

To tackle the labor shortage, TSMC is transferring experienced technicians from Taiwan to Arizona for training local workers over a short period. The company, in its quest to accelerate the project, is also importing temporary workers from Taiwan to handle its sophisticated facility systems and some construction activities.

Meanwhile, TSMC continues to deal with a financial downturn, reporting a 13.7% drop in Q2 revenue to $15.6 billion, down from the same period last year. The company’s Q2 net income also fell by 23.3% to $5.9 billion – the first annual decline in quarterly profit TSMC has reported in four years.

The slump in earnings is largely attributed to decreasing purchases of smartphones. TSMC, known for producing main processors for Apple iPhones, Qualcomm mobile chipsets, and processors by Advanced Micro Devices, has felt the impact of weaker global economic conditions and a softened end-market demand.

Despite these challenges, TSMC remains hopeful for Q3 2023, citing expectations of a boost from the robust ramp-up of their 3-nanometer technologies. However, the company also foresees a continuation of customers’ inventory adjustments, offsetting potential gains.

Further, TSMC anticipates higher building costs for its fabs in the U.S., Europe, and Japan due to smaller fab scales and earlier stage semiconductor ecosystems compared to Taiwan. To mitigate these higher costs, the company is engaging with senior government officials to discuss expansion plans and possible avenues to narrow down the cost gap.