TSMC Triples Arizona Factory Investment To $40 Billion

Chip manufacturing capacity in the US look set to gain another boost, after Taiwanese Semiconductor Manufacturing Company (TSMC) looks set to confirm an expansion of its Arizona facility.

Last month TSMC confirmed that it was already constructing a building that could serve as its second chip factory in Arizona in the United States.

Now Reuters has reported that President Joe Biden will visit the Arizona plant of TSMC on Tuesday as the Taiwanese chipmaker is set to more than triple its planned investment in the factory to $40 billion, among the largest foreign investments in US history.

Biden visit

The additional investment is considered a big win for President Biden after chip shortages disrupted both the US and global economy during the Covid-19 pandemic.

Joining Biden for his visit to Taiwan Semiconductor Manufacturing Co Ltd’s facility in Phoenix will be Apple CEO Tim Cook, TSMC founder Morris Chang, and the heads of chipmakers Micron, Sanjay Mehrotra, and NVIDIA founder and CEO Jensen Huang, among others, the White House said.

They will attend a “tool-in” ceremony, which is the symbolic moving of the first equipment onto the shop floor of the new $12 billion facility.

“Bringing TSMC’s investment to the United States is a masterstroke and a game-changing development for the industry,” NVIDIA’s Huang said in remarks prepared for Tuesday’s event.

TSMC executives will announce a plan to build a second nearby facility that will produce advanced chips by 2026.

The company will announce its second plant will produce advanced N3 chips by 2026 and that its current facility will develop even more cutting-edge chips than originally proposed, going from N5 down to N4.

TSMC’s investment in Arizona at two facilities will total $40 billion, making it the company’s largest investment outside of Taiwan, and one of the largest foreign direct investments in US history, Reuters noted.

Arizona expansion

TSMC is the world’s largest contract chipmaker and a major supplier to Apple and others.

It announced back in 2020 that it would be building a $12bn 5mn chipmaking plant in Arizona, construction of which began in 2021.

The Taiwanese chipmaker hopes its first Arizona factory will begin production in 2024 and will make sophisticated 5 nanometer chips, which can be used in high-end defence and communications devices.

The Arizona fab was built on a 1,129-acre tract of land that TSMC acquired in north Phoenix. It is thought that TSMC intends to build as many as six factories at its Arizona campus over the next 10 to 15 years.

The first 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, and has older chip facilities in China and Washington state.

US funding

It should be remembered that in April 2021 TSMC had pledged to invest $100m funding to bolster advanced chip manufacturing over the next three years, in order to meet fierce demand for chips during the Covid-19 pandemic.

However that chip demand has waned after a slump in the shipment of computers, amid an increasingly gloomy economic outlook, high interest rates, and high inflation – all of which is battering consumer spending.

Ever since the US president Joe Biden signed the Chips and Science Act in August that sets aside nearly $53 billion to boost domestic semiconductor manufacturing, America has been steadily ramping up its domestic chip manufacturing capabilities.

The United States has been encouraging foreign tech firms to manufacture in the country and has actively supported local research, development and manufacturing after passing its CHIPS Act.