TSMC Reportedly Looks To Raise A Second Arizona Chip Fab

Taiwan's chipmaking giant TSMC is said to be preparing to build another semiconductor fabrication plant in Arizona, alongside the facility it completed this summer, in a move that may be seen as a vindication of the US government’s CHIPS Act funding.

According to reports in the Wall Street Journal, TSMC is planning to announce in the near future that it will build a further factory for making cutting edge chips at a site just north of Phoenix, adjacent to the $12 billion Fab 21 plant the company decided to construct in 2020.

The new facility will be used to manufacture 3nm chips, according to the paper, which cites anonymous sources "familiar with the expansion plans." The scale of this project is expected to be comparable to the existing plant.

Cutting back on capital investment?

Reports last year suggested that TSMC was already considering constructing up to five additional semiconductor factories in Arizona, on top of the one just completed, which is not scheduled to start up production of chips until 2024.

The move to build another plant comes despite the Taiwanese chip behemoth announcing recently that it was cutting back on its capital investment budget in the face of a market slowdown which led to TSMC predicting that Q4 revenue growth will likely be flat.

However, the fact that TSMC is still considering further facilities in Arizona could be seen as vindication that the US CHIPS Act, which includes subsidies and other incentives for semiconductor companies like TSMC to build on American soil, is having the desired effect.

That said, it's always amusing to us to see chip fabs, which require an incredible amount of water to operate, being built in Arizona and other desert-like places.

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Earlier this year, TSMC founder Morris Chang said that America's attempts to expand its domestic chip production would be an "expensive exercise in futility." He seems happy to take the subsidies now.

TSMC reportedly plans to hold a ceremony in Arizona in December to mark the installation of the first batch of production equipment in its Fab 21 plant, and according to the reports, also plans to use it to manufacture 4nm chips, a development of its 5nm process technology.

TSMC was set to begin volume production of 3nm silicon this quarter, but reports suggest has scaled back plans for 3nm production this year.

This is said to be partly due to delays to Intel's Meteor Lake processor, which will be composed of tiles, some of which are being outsourced to TSMC to manufacture. ®