TSMC's board approves $3.5 billion investment towards a new factory in Arizona

nanoguy

Posts: 610   +8
Staff member
Something to look forward to: TSMC's move to build an advanced factory in the US is an important win, even if it may never rival GigaFabs in Taiwan. On the other hand, the company will become more competitive with GlobalFoundries and Samsung Foundry.

TSMC has been reluctant about building a factory in the US, despite continuous pressure from the Trump administration to build its most advanced semiconductor foundry in the United States and in turn bolster national security at a time when China is firing on all cylinders to get ahead in the technological race.

Back in January, the company's interest in such a project was merely tentative. Five months later, it announced plans to build an advanced factory in Phoenix, Arizona that would cost around $12 billion and deliver the first wafers in 2024.

This month, TSMC's board of directors approved an initial investment sum of $3.5 billion (or NT$99.8 billion) that will go towards a wholly-owned subsidiary in Arizona. The remainder of $8.5 billion will be spent through 2029, and the factory will employ 1,600 people, not to mention many thousands more at various local suppliers.

Construction will commence in 2021, with high-volume production expected to start in 2024 if everything goes to plan. Initial capacity estimates place the facility at around 20,000 wafers per month, and TSMC says it will use its 5nm process node. But more importantly, this will be the first advanced foundry built by TSMC outside Taiwan that is on the same level as its domestic facilities.

The company says 3nm production will enter volume production in the second half of 2022 at its Taiwan "GigaFabs," which are capable of more than 100,000 wafer starts per month and have now received $15.1 billion in additional funding. This means the Arizona facility will probably not serve TSMC's bigger customers such as Apple, Intel, AMD, Qualcomm, and Nvidia, at least not at first.

Still, the Arizona facility will also act as an R&D division of TSMC on US soil, and will rely on the same supply chain as Intel, which also owns multiple factories in Arizona and Oregon. Ultimately, this will help TSMC strengthen its position against rival foundries, provided it manages to attract top local talent.

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wiyosaya

Posts: 5,472   +3,574
I feel deeply apologetic on America's behalf for Trump taking away Taiwanese jobs. Biden will correct this and Arizona made sure of it with a HUGE blue wave.
I see it as rather ironic that foreign companies are building plants in the US. Foreign companies that do call center work (tech support for some industries) have also taken this approach. It is jobs for Americans, though.

One goal it does not achieve is that Companies like crApple are not investing in US workers - yet. I am not expecting to see that anytime soon no matter who is president.
 

wiyosaya

Posts: 5,472   +3,574
It is probably to avoid any supply chain related issues that stem from sanctions on Chinese companies.
I agree. Companies both foreign and domestic have likely developed strategies to circumvent the trade war. The company that I work for did.

A local factory will encourage a local high tech supply chain to develop.
Likely true, as well.

I have to wonder, though, what will happen if the trade wars disappear - at some point, they likely will.
 

Uncle Al

Posts: 7,581   +6,088
This is going to be an interesting one to watch. In the long run it could be very beneficial but only if the government continues to back it with purchases and doesn't find new ways to tax them to death. Biden has gotten a little smarter than he was in the early days, but he better find more ways to encourage this rather than use it as a new was to suck up money for the Govt.
 

Lew Zealand

Posts: 1,623   +1,684
TechSpot Elite
TSMC's chairman Mark Liu in June: “Subsidies will be a key factor in TSMC’s decision to set up a fab in the US,” he said. “We are still talking to the US government. Our request is that the state and federal governments together make up for the cost gap between the US and Taiwan.”

If they're setting up a fab, then they're getting subsidies as TSMC is of course in the business of making money. If anything comes up to refute that then that'll be great but I don't anticipate that happening.
 

sorten

Posts: 57   +85
TechSpot Elite
If the Biden corporate tax plan passes, my guess is this proposal quietly disappears.
I may be off base, but I suspect that both parties have realized that the United States needs strategic manufacturing infrastructure. Even if a more restrictive tax plan passes, which is in doubt with a likely Republican Senate majority, I think there will be targeted subsidies.
 

Endymio

Posts: 989   +830
TSMC's chairman Mark Liu in June: “Subsidies will be a key factor in TSMC’s decision to set up a fab in the US" ...If they're setting up a fab, then they're getting subsidies... If anything comes up to refute that then that'll be great but I don't anticipate that happening.
Whoa, you've got the cart before the horse. Of course TSMC (as do all companies) would like free government money. But that is no reason to automatically assume they're getting it. I saw Liu's statement back in June also, but it was simply the opening salvo in a negotiation. New federal subsidies would require an act of Congress, or executive action under an existing subsidy program -- none of which TSMC falls under, as far as I know.
 

Endymio

Posts: 989   +830
3.5 billion for a 5nm fab?
As the article clearly states, that's the initial investment in a total price tag of $12billion.

I may be off base, but I suspect that both parties have realized that the United States needs strategic manufacturing infrastructure.
Both parties are on record as stating this as early as 2010, when Intel opened its first Chinese fab. But no action was actually taken. And given the current progressive wing in the House, I don't see them favoring any sort of plan that even appears to favor corporate assistance in any form.
 
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mbrowne5061

Posts: 1,684   +958
I have to wonder, though, what will happen if the trade wars disappear - at some point, they likely will.
Unlikely. Globalization of trade has made trade wars a better avenue for nationalistic brinkmanship, better than actual war at least. The only way trade wars disappear is if global trade is radically scaled back - and then the threat of real war gets put back on the table.
 

koblongata

Posts: 335   +141
It is probably to avoid any supply chain related issues that stem from sanctions on Chinese companies.

A local factory will encourage a local high tech supply chain to develop.
Added to that China is always threatening to take Taiwan by force..
 
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Endymio

Posts: 989   +830
Unlikely. Globalization of trade has made trade wars a better avenue for nationalistic brinkmanship, better than actual war at least
Germany's #1 trading partner in the years before 1914 was France: the first nation it attacked in WWI. Hardly an isolated case either: historically speaking, a preponderance of trade between two nations, if anything, increases the potential for conflict.
 
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Reehahs

Posts: 1,007   +621
What? Tax breaks are not cash in hand. Tax breaks don't reduce the capital expenditure required to build/purchase new property, plant & equipment.
That's where other incentives come in. For example: you want to build in the middle of nowhere, sure, here is some free infrastructure to help you.
 
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