tsmc's arizona chip fab nears completion, production on track
Phoenix, Friday, 13 December 2024.
tsmc’s advanced chip fab in Arizona is almost complete, with construction nearly back on schedule. This facility, located near Phoenix, covers 3.5 million square feet and was initially projected to cost $12 billion but has now increased to $20 billion. Full production of 5-nanometer chips is delayed until 2025, but pilot production has begun with sample wafers. The plant plans to produce 4-nanometer chips at a rate of 20,000 wafers per month. Apple is expected to be the largest customer. tsmc intends to build two more fabs at the site by 2030, pushing total investment to $65 billion. Despite facing higher operational costs due to chemical supply chain challenges, the company is optimistic about matching the manufacturing quality of its Taiwanese facilities. This move is critical for reducing U.S. reliance on foreign chip production and enhancing domestic manufacturing capabilities.
Financial implications and market position
TSMC’s strategic expansion comes amid strong financial performance, with first-quarter 2024 revenue reaching $18.8 billion, marking a 13% year-over-year increase [2]. The company projects second-quarter revenue between $19.6 and $20.4 billion [2]. However, Macquarie Bank warns that operating costs at the Arizona facility could be up to 30% higher than in Taiwan [4]. This cost differential stems primarily from semiconductor fabrication complexity and chemical supply chain challenges [4].
Government support and employment impact
The U.S. Department of Commerce has offered substantial support through a preliminary CHIPS Act package of $6.6 billion in grants and up to $5 billion in loans [2]. TSMC’s total federal commitment, including Investment Tax Credits, is expected to exceed $27 billion [2]. The company has already hired 2,200 workers as of April 2024 [2], with plans to employ over 6,000 workers across all three planned facilities [1].
Technical capabilities and future expansion
The facility is currently running pilot production of 4-nanometer chips [1], with the second fab planned to produce 2- and 3-nanometer chips starting in 2028 [2]. A third facility, expected by decade’s end, will focus on 2-nanometer and more advanced chips [1]. CEO C.C. Wei emphasized the company’s commitment to maintaining consistent quality standards across all locations [2], despite challenges in establishing a U.S.-based chemical supply chain [4].