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Apple, AMD Back TSMC’s Tripled Investment, Tech Upgrade in Arizona


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Taiwan Semiconductor Manufacturing Co. (TSMC) has more than tripled its overall investment in Arizona to about $40 billion for two chip facilities with the support of customers like Apple and AMD, stoking a U.S. effort to revive domestic chip production.

The world’s largest chip foundry said its second fab at a site near Phoenix is slated to start production at the 3-nm node in 2026. When it starts, the project will make the most advanced chips in the U.S.

The CEOs of TSMC’s largest customers, including Apple, AMD and Nvidia, joined a Dec. 6 event in Arizona to mark the occasion. Apple CEO Tim Cook and AMD CEO Lisa Su said their companies plan to source chips from TSMC in Arizona.

“We are proud to become TSMC’s largest customer at their new Arizona site,” Cook said in a prepared statement.

AMD, one of TSMC’s top-five customers, also gave the Arizona project a vote of confidence.

“As the leader in semiconductor manufacturing, TSMC enables us to focus on what we do best: designing innovative chips that change the world,” Su said in a statement provided to EE Times. “AMD expects to be a significant user of the TSMC Arizona fabs and we look forward to building our highest-performance chips in the United States.”

From left, AMD CEO Lisa Su, Nvidia CEO Jensen Huang and Apple CEO Tim Cook join TSMC CEO C.C. Wei and TSMC chairman Mark Liu as well as TSMC founder Morris Chang in Arizona.

U.S. President Joe Biden joined CEOs of Apple, AMD, Nvidia and ASML at the event, according to a statement from the White House. Apple and AMD are TSMC’s largest customers.

“To have all of these CEOs together to mark this occasion, I think, is a reflection of the fact that this is about more than just one groundbreaking, but how we build out this innovation ecosystem for semiconductors in the United States,” U.S. National Economic Council Director Brian Deese said in a White House briefing. “[Commerce] Secretary [Gina] Raimondo and I will be spending some time with those CEOs and the president as well to really talk through where we are on our strategy, what we need to work together on and make sure that we are providing clear guidance to the industry on issues, including on the export control side in addition to the implementation of the CHIPS bill.”

The investment is the largest foreign direct investment in Arizona and one of the largest in U.S. history, TSMC said in a prepared statement.

In 2020, TSMC led other major chipmakers like Samsung and Intel with an initial $12 billion investment in Arizona. The administration of former U.S. President Donald Trump helped clinch the TSMC agreement as part of a strategy to revive the declining American chip industry and blunt China’s growth. TSMC’s 2020 announcement came as the U.S. blocked TSMC’s supply of advanced chips to Chinese telecom giant Huawei, at the time the world’s largest smartphone maker.

TSMC’s increased investment comes as other chipmakers are cutting expenditures amid an industry downturn. The Taiwan company’s decision demonstrates its confidence in the U.S., according to Dan Hutcheson, an analyst with TechInsights.

“TSMC’s announcement is a strong commitment to reshore the U.S. chip supply chain,” Hutcheson told EE Times. “This continued investment in the face of a slowdown is an expression of TSMC’s understanding of the extremely critical role it plays in supply chain continuity and a willingness to pay it forward.”

While TSMC adds jobs and investment, rival Intel is doing the opposite, according to Bob O’Donnell, chief analyst at Technalysis Research.

“Intel is cutting investment and jobs primarily because of its still-strong dependence on the PC market, whereas TSMC is making chips for all types of markets,” he said. “In addition, TSMC has an incredibly strong foundry business, while Intel is still just building it up from scratch.”

The higher costs that TSMC will incur by manufacturing in the U.S. should be manageable, Hutcheson said. “TSMC can overcome what many think are huge cost challenges in the U.S. One proof is that other companies have shown they can be profitable manufacturing in the U.S., including foundries. Labor costs are a small part of overall cost structure. Most of the cost factors, such as equipment and materials, are globally sourced, so there are local cost advantages. As for Arizona, it’s the lowest-cost state to build a fab in the U.S.”

When complete, TSMC’s two fabs in Arizona will manufacture over 600,000 wafers per year, with an estimated end-product value of more than $40 billion, according to the company.

TSMC Arizona’s first fab, originally targeting the 5-nm node for initial production, is now scheduled to start output at 4 nm in 2024.

The company needs to invest strategically to ensure the supply chain security of its largest customers like Apple, Nvidia and AMD, according to Hutcheson.

“Stopping now would mean not being ready for the upturn,” he said.

TSMC Arizona’s two fabs are expected to create an additional 10,000 high-paying high-tech jobs, including 4,500 direct TSMC jobs.

The Taiwan chipmaker appears more confident that moving production away from the island makes sense given the subsidies that governments around the world are offering, O’Donnell said. “TSMC recognizes the need for geographical diversity and, like Intel, is likely eager to take advantage of subsidies for semiconductor manufacturing that the U.S. and several major European countries are happy to spend.”

TSMC Arizona is in the planning stages for an on-site industrial water reclamation plant that, when finished, will allow the TSMC Arizona site to achieve near-zero liquid discharge, the company said.

“When complete, TSMC Arizona will be the greenest semiconductor manufacturing facility in the United States,” said TSMC chairman Mark Liu. “We are thankful for the continual collaboration that has brought us here and are pleased to work with our partners in the United States to serve as a base for semiconductor innovation.”

 





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