TSMC has announced that it will delay the start of production at its Arizona plant until at least 2025. The Taiwanese foundry announced the postponement of the start of production from the original late 2024 date, while at the same time revising down its initial revenue forecast for this year.

The company cited difficulties in sourcing skilled labor needed for its state-of-the-art fab and the higher cost of operating the facility in the US compared to Taiwan as the main reasons for the postponement.

To counter this, TSMC will reportedly shift some of its employees to Arizona to help train the workforce. Maricopa Community College will work with Intel to train semiconductor engineers within two weeks in anticipation of the growing need for skilled workers in the area.

However, it is not clear whether TSMC is looking for the required skill level. Also, there may be broader economic reasons behind TSMC's decision to delay the start-up of the Arizona plant.

Despite the explosion of enthusiasm for AI and hence the growing demand for AI silicon, of which TSMC manufactures the majority along with Nvidia, the uncertain geopolitical climate has not been enough for TSMC to overcome the slump in demand.

This was the first quarter in four years that TSMC, the chip manufacturing giant that makes all of Apple's and AMD's processors as well as Nvidia's, AMD's, and Intel's GPUs, saw a profit decline. It's not all doom and gloom, as they are actually still profitable, but a nearly $6 billion drop in profits is pretty significant.

Unlike much of the high-tech industry, TSMC is not betting on AI, at least in the short term; TSMC Chairman Mark Liu told Bloomberg: "The short-term enthusiasm about AI demand definitely cannot be extrapolated to the long term. We can't even predict next year how the rapid demand will continue or level off"

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However, that is in the short term, and TSMC CEO C.C. Wei reinforces his belief that AI will be a foundational industry for this contract chipmaker in the future.

"Now ChatGPT reinforces the strong belief we already have in HPC and AI, which are structural megatrends for TSMC's future business growth," Wei says.