TSMC Responds to Pressure for US-Based Fab, Announces Plans for $12 Billion Chip Factory in Arizona

Earlier this week, the US government applied pressure on the big three chipmakers—TSMC, Intel, and Samsung—to build more US-based chip factories. Just a few days later, it seems that Taiwan Semiconductor Manufacturing Company is responding to the call, announcing its intentions to initiate a $12 billion project for a 5 nm semiconductor fabrication facility in Arizona. 

Generating 1,600 Jobs

The US government's call for more US-based fabs was fueled by the Trump Administration's goal for more self-sufficiency in semiconductor innovation, according to the Wall Street Journal. TSMC's new 5 nm wafer fab will reportedly produce 1,600 high-tech professional jobs. TSMC also anticipates the fab facility will promote thousands of jobs peripherally in the US semiconductor ecosystem.

Rendering of TSMC's Fab 18, which is a 5 nm production facility. Image used courtesy of Taiwan Semiconductor Manufacturing Co., Ltd.

The US Department of Commerce praises the deal, explaining, "TSMC’s investment will reinforce American leadership in cutting-edge semiconductor design and manufacturing and will further accelerate Arizona’s rise as a global hub for the technology industry."

TSMC's only other US fab is in Camas, Washington.

How Big Is the Project?

TSMC expects financial support from the US government and the state of Arizona as they undertake this project from 2021 to 2029. TSMC's explicit goal driving the "strategic" announcement is to bolster the US semiconductor ecosystem and empower high-tech professionals to engineer semiconductor products that will benefit from the "proximity of a world-class semiconductor foundry."

TSMC fab. Image used courtesy of Taiwan Semiconductor Manufacturing Co., Ltd.

A Bernstein analyst, quoted in Reuters, says the $12 billion budget for the Arizona fab suggests that the project won't be big—perhaps comparable in scale to TSMC fabs in China—indicating a "balance between the US and China." He adds that the new plant may generate around 3% to 4% revenue.

An Announcement at a "Critical Juncture"

This announcement of a TSMC fab on US soil intersects at a crucial moment in which the US is reigning in its semiconductor supply chain from China. Just this morning, the US Department of Commerce reported to Reuters that it is blocking chip supplies to Huawei Technologies, which is currently on Washington's blacklist. 

Reuters notes that TSMC supplies chips to tech giants, including Apple, Qualcomm, and Huawei Technologies.

On this matter, Secretary of State Michael R. Pompeo remarks, "TSMC’s announcement comes at a critical juncture, when China is competing to dominate cutting-edge technology and control critical industries."

US Secretary of State Mike Pompeo. Image used courtesy of Kevin Lamarque/TSMC

He adds, "The TSMC facility in Arizona will increase U.S. economic independence, bolster our safety and competitiveness, and strengthen our leadership in high-tech manufacturing."

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