Democrat Senators Demand Answers Over TSMC US Factory

A political row is brewing in the United States after Democrat senators wrote to the Trump administration saying they have “serious questions” about a new chip factory to be built in Arizona.

Last week Taiwan Semiconductor Manufacturing Co Ltd (TSMC), which is the world’s biggest contract chipmaker, announced plans to build a $12 billion factory in Arizona.

That new factory announcement came after it emerged the Trump administration had been in talks with semiconductor companies about building chip factories in the United States.

TSMC factory

One of the core promises of Donald Trump’s election as US President in 2016 was his pledge to encourage companies to keep or create jobs in the United States rather than sending them abroad.

This meant retaining and encouraging firms to keep or build new factories in America.

The TSMC announcement last week was hailed by Commerce Secretary Wilbur Ross as signalling a “renaissance in American manufacturing” fuelled by President Trump.

But now democratic senators have flagged national security concerns and potentially undisclosed subsidies, and asked for the White House to respond.

According to Reuters, top Senate Democrat Chuck Schumer and two colleagues wrote to Secretary Ross and Defense Secretary Mark Esper on Tuesday, in which they said they “strongly support” efforts by the administration to “on-shore” semiconductor plants in the United States.

But Schumer, along with Patrick Leahy and Jack Reed, urged more transparency and asked the government to consider “companies that already have built a significant presence in the US”, pointing to Micron, GlobalFoundries and Cree.

“We have serious questions as to how this project takes into consideration national security requirements and how it aligns with a broader strategy for building a diverse US semiconductor manufacturing supply chain,” Reuters reported the men writing of the TSMC plan.

“We ask that you cease any such negotiations or discussions until you have briefed the relevant authorisation and appropriations committees with your plans, including any commitments you have made to funding, tax breaks, licensures, or other incentives,” they added.

The US Commerce Department, the Pentagon and TSMC did not immediately respond to requests for comment, Reuters reported.

Arizona factory

The $12 billion TSMC factory in Arizona is expected to create over 1,600 jobs, and the plant will be built over a nine year period, with construction beginning in 2021.

It is the biggest foreign investment by TSMC to date.

The factory will begin production in 2024 and will make sophisticated 5 nanometer chips, which can be used in high-end defense and communications devices.

The factory is expected to process up to 20,000 silicon wafers per month. Each wafer can contain thousands of individual chips.

And despite democratic senator concerns, it should be noted that the Trump administration has had some success in getting tech firms to commit to the United States.

In February 2017 for example then Intel CEO Brian Krzanich stood beside Donald Trump at the Resolute desk in the Oval Office to announce that the US chipmaker would invest $7 billion to open a factory (Fab 42) in Arizona, which it claimed at the time would be “the most advanced semiconductor factory in the world”.

Intel’s Fab 42 factory in Chandler, Arizona, is expected to start production sometime this year.

Apple boss Tim Cook also revealed in 2017 that his firm would establish a $1 billion (£776m) fund to promote advanced manufacturing jobs in the United States, although most of its iPhones are manufactured in the far east.

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