TSMC To Build $12 Billion Chip Factory In US

Hours after US President Donald Trump threatened to “cut off the whole relationship” with China over the Coronavirus pandemic, comes news of a significant win for US manufacturing.

Taiwan Semiconductor Manufacturing Co Ltd, which is the world’s biggest contract chipmaker, said it plans to build a $12 billion factory in Arizona.

The new factory announcement came after it emerged this week that the Trump administration was in talks with semiconductor companies about building chip factories in the United States.

US manufacturing

The White House was said to be speaking to both Intel and Taiwan Semiconductor Manufacturing Co (TSMC) about construction of US plants.

One of the core promises of 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.

Trump has had some success in this regard among technology firms.

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.

Intel said it was in discussions with the United States Department of Defense over improving domestic sources for microelectronics and related technology, Intel spokesman William Moss was quoted as saying by Reuters in an emailed statement.

TSMC factory

But now the plan of Taiwan’s TSMC to build a $12 billion factory in Arizona with be viewed as another win for the Trump administration’s efforts to take back manufacturing and jobs from China.

According to Reuters, the plan will create over 1,600 jobs, and US Secretary of Commerce Wilbur Ross touted the deal as “another indication that President Trump’s policy agenda has led to a renaissance in American manufacturing.”

It should be remembered that TSMC is a major chip supplier to firms such as Apple, Qualcomm, and even Chinese firms such as Huawei Technologies, which President Trump blacklisted in May last year.

“This project is of critical, strategic importance to a vibrant and competitive US semiconductor ecosystem that enables leading US companies to fabricate their cutting-edge semiconductor products within the United States,” TSMC said.

The Taiwanese chipmaker said the plan was to build the plant over nine years, and construction will begin 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.

TSMC manufactures the bulk of its chips in Taiwan, Reuters reported, and has older chip facilities in China and Washington state.