In brief: TSMC may be the world's largest contract chipmaker, but that doesn't make its expansion efforts any easier. The company recently hit a snag in the process of building its Arizona facility, which is located just 50 kilometers away from Intel's Chandler campus.
Foundries like TSMC have been scrambling to expand capacity amid a boom in demand for everything with a chip inside. In the case of TSMC, no less than $40 billion will go into these efforts this year, and chances are the total expenditure will reach $44 billion. Additionally, it will need to hire around 8,000 engineers across the US, Taiwan, Japan, and China.
That said, the progress on these expansions has been slower than expected. According to a Nikkei report, construction at TSMC’s 5nm chip plant in Arizona is currently three months behind schedule. The publication cites industry sources that believe this is the result of a challenging labor market and a more difficult compliance process in the US compared to Asia.
Construction for the Arizona facility began in June 2021, and TSMC originally planned to move in production equipment this fall. Given the setback, the company may have to delay those plans to February or March 2023. After that, the company will need an additional 12 months to certify production lines and ramp up chip manufacturing.
Part of the problem is that Intel is also looking to expand its Chandler, Arizona facility, which means TSMC has to compete for the same limited resources and talent as its US-based rival. Another pain point is the slow recovery of tech supply chains, but a more pressing matter for TSMC is that of government subsidies — a must for companies investing in new chip manufacturing plants, which are notoriously expensive to build and run.
In related news, TSMC will invest an additional $1.6 billion into its Japan factory, which is being built in collaboration with Sony. Construction is expected to start later this year, and production could get going by the end of 2024.