Core Viewpoint - TSMC's wafer production costs in Arizona are only about 10% higher than those in Taiwan, contrary to the belief that U.S. production is prohibitively expensive [1][2]. Cost Factors - Equipment costs account for over two-thirds of semiconductor production costs, and prices for tools from leading manufacturers are similar in both Taiwan and the U.S., mitigating location-based cost differences [2]. - Labor costs in the U.S. are approximately three times higher than in Taiwan; however, due to advanced automation, labor constitutes less than 2% of total costs in wafer manufacturing [2]. TSMC's Production and Logistics - TSMC's wafers produced in Arizona are sent back to Taiwan for cutting, testing, and packaging, complicating logistics but not significantly increasing costs. TSMC plans to build packaging capacity in the U.S. [2]. - TSMC reportedly charges a 30% premium for chips produced in the U.S. [2]. Revenue Distribution by Node - In 2024, nearly 50% of TSMC's revenue will come from nodes that are five years old or older, such as 7nm and above, contrasting with Intel's strategy of shutting down older nodes [3][4]. - Advanced nodes (3nm and 5nm combined) contribute 52% of revenue but only 27% of profit, indicating that profitability is still developing for these newer technologies [6][9]. Profitability Insights - The 3nm and 5nm nodes were reported to be operating at a loss in 2023, but profitability is expected to improve as production ramps up [9]. - TSMC's financial health is bolstered by older nodes that have fully depreciated, while newer nodes still carry depreciation costs [11]. Methodology - The analysis of TSMC's profitability by node involves estimating costs based on revenue shares and accounting for depreciation, R&D, and operational expenses [12].