The world’s largest contract chipmaker is opening a second fabrication plant in Arizona to produce advanced semiconductor technology, as the U.S. government seeks to shore up America’s chipmaking supply chain.
Taiwan Semiconductor Manufacturing Co. (TSMC), a major supplier to Apple,
announced today that the second fabrication plant (or “fab”) will bring the company’s total investment in its manufacturing site north of Phoenix to $40 billion. The fab has started construction and is slated to begin production of cutting-edge 3-nanometer process technology in 2026.
The site’s initial fab, which broke ground last year with a planned investment of $12 billion, will produce chips using the less advanced 4-nanometer process. When complete, the two fabs will crank out more than 600,000 wafers per year, generating an estimated $40 billion of end-product value, according to TSMC.
The first fab is scheduled to be operational by 2024; but a letter from TSMC to the U.S. Department of Commerce last month cited challenges with construction costs and project uncertainty at the site,
according to reporting by The Wall Street Journal on Dec. 5.
The company said the overall site will create 10,000 high-tech jobs, including 4,500 direct jobs with TSMC, in addition to more than 10,000 construction jobs. President Joe Biden is expected to visit the facility today along with TSMC’s founder, Morris Chang.
TSMC said its $40 billion investment in the manufacturing site will represent the largest foreign direct investment in the history of Arizona. Headquartered in Taiwan’s Hsinchu Science Park, TSMC is the world’s most valuable semiconductor company, with a market cap of more than $415 billion. Major customers for TSMC’s chips include AMD, Apple, Broadcom, and Nvidia.
The $280 billion
CHIPS and Science Act, which Biden signed into law in August, likely played some role in TSMC’s decision to double down on its Phoenix project. The bill directs federal investment of more than $52 billion into semiconductor research and manufacturing, with the aim of strengthening the U.S. supply chain for the crucial technology and countering China’s rising prowess in the industry.
The 600,000 wafers TSMC’s facility is designed to produce could meet the annual demand for U.S. chips, Ronnie Chatterji, White House coordinator for CHIPS implementation,
told CNBC.
Although the United States invented the semiconductor, just 12 percent of chips were manufactured in the country as of 2020, falling from 37 percent in 1990, according to
data from the Semiconductor Industry Association. East Asia accounted for 75 percent of global semiconductor production, with China expected to have the world’s largest share of chip production by 2030 due to massive government subsidies.
