TSMC Mulls Arizona Factory Expansion – Report

Chip manufacturing capacity in the US could be boosted again, after Taiwanese Semiconductor Manufacturing Company (TSMC) said it was considering adding a second chip making facility in Arizona.

TSMC told Reuters in an emailed statement on Wednesday that it was already constructing a building that could serve as its second chip factory in Arizona in the United States.

TSMC is the world’s largest contract chipmaker and a major supplier to Apple. It announced back in 2020 that it would be building a $12bn chipmaking plant in Arizona.

Arizona fab

Construction of that 5mn Arizona chip factory began in June 2021 and was completed in August 2022.

The Taiwanese chipmaker hopes the 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 TSMC bought 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 current 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.

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.

Second facility

According to the Reuters report, TSMC on Wednesday said that while it could use the new building for future expansion, it has not yet arrived on a final decision for a second chip manufacturing plant.

“In light of the strong customer demand we are seeing in TSMC’s advanced technology, we will consider adding more capacity in Arizona with a second fab based on operating efficiency and cost economic considerations,” the company was quoted as saying.

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.