Thursday, May 14th 2020

TSMC Building a 5nm Fab in Arizona as the U.S. Government Gets Involved

It has become a matter of national strategy (or pride) to get TSMC to build a cutting-edge silicon fabrication facility on U.S. soil. Hot on the heals of a report in which TSMC denied it has any plans to build a fab in the U.S., we're learning from a Wall Street Journal that the world's largest independent semiconductor manufacturing company, will build a facility in the U.S. after all. Apparently TSMC will build a silicon fabrication facility in the state of Arizona. The fab will manufacture 5 nm-class chips, to begin with.

TSMC got around to drawing up plans to build a stateside facility after the "involvement" of the State- and Commerce Departments of the U.S. Government. The two are involved not just in coaxing TSMC, but also in the specifics of the planning to get them to the Grand Canyon state. The Donald Trump administration made significant national policy changes with manufacturing, in the wake of the COVID-19 pandemic causing significant wait times in getting silicon products from Asia to the US.

Update 01:25 UTC: TSMC made its U.S. fab plans official with an announcement. Press release and additional commentary below.

TSMC Press Release

TSMC today announced its intention to build and operate an advanced semiconductor fab in the United States with the mutual understanding and commitment to support from the U.S. federal government and the State of Arizona.

This facility, which will be built in Arizona, will utilize TSMC's 5-nanometer technology for semiconductor wafer fabrication, have a 20,000 semiconductor wafer per month capacity, create over 1,600 high-tech professional jobs directly, and thousands of indirect jobs in the semiconductor ecosystem. Construction is planned to start in 2021 with production targeted to begin in 2024. TSMC's total spending on this project, including capital expenditure, will be approximately US$12 billion from 2021 to 2029. This U.S. facility not only enables us to better support our customers and partners, it also gives us more opportunities to attract global talents. This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem that enables leading U.S. companies to fabricate their cutting-edge semiconductor products within the United States and benefit from the proximity of a world-class semiconductor foundry and ecosystem.

TSMC welcomes continued strong partnership with the U.S. administration and the State of Arizona on this project. This project will require significant capital and technology investments from TSMC. The strong investment climate in the United States, and its talented workforce make this and future investments in the U.S. attractive to TSMC. U.S. adoption of forward-looking investment policies to enable a globally competitive environment for a leading edge semiconductor technology operation in the U.S. will be crucial to the success of this project. It will also give us the confidence this and other future investments by TSMC and its supply chain companies will be successful.

In the United States, TSMC currently operates a fab in Camas, Washington and design centers in both Austin, Texas and San Jose, California. The Arizona facility would be TSMC's second manufacturing site in the United States.

TechPowerUp Commentary

The key words in the above press release are "build and operate," and excludes ownership. It looks like the U.S. government has talked TSMC into limiting its financial exposure, by simply franchising itself to a U.S.-based entity that will foot the bill of this venture.

We also recently covered a China Times report pointing at Intel being one of TSMC's 5 nm-class customers, possibly for its future-generation Xe HP scalar processors, which constitute high-technology. HPC chips are low-volume, high-margin products, and so the U.S. could find it in its strategic interest to see them manufactured on home soil.
Source: Wall Street Journal
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58 Comments on TSMC Building a 5nm Fab in Arizona as the U.S. Government Gets Involved

#1
btarunr
Editor & Senior Moderator
Personal opinion: I think the US is also insulating itself from any military conflict affecting Taiwan. There have been elevated tensions between Taipei and Beijing. Then again, it would take a lot more than just moving TSMC. Quite a few indispensable Taiwan-based companies should spread their manufacturing outside the island, to places such as Japan, Vietnam, the Philippines, etc.
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#2
mtcn77
This is not the pride involved. US is making a return into non-liberal policies. You have to have institutions for a republic, that is what Trump is doing. Democrats and their detached "ends from their means" economic policies are put into order. No more globalisation for you. You have to put your money where your mouth is.
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#3
Fluffmeister
The Donald knows the US have fallen behind, Intel are struggling to get beyond 14nm+++++++++++++, and AM "real men have fabs" D embarrassingly couldn't afford to compete and spun off GlobalFoundries years ago.
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#4
mtcn77
You have to have a reference of Brexit and James Goldsmith - he initiated the disbandment of private enterprise and coming of market economics(market globalisation), but protested the debasement of its productive capacity and sole outlook in a stocklist.
Brexit happened years after his demise, so his protests didn't go unheard. No more disinterested involvement.
Fluffmeister
Donald knows the US have fallen behind
I don't think it was the industry, it was the marketplace having the final say. It is more fundamental than competition, like when US split up Bell, it was the footsteps of the coming globalisation. They did it in order to maintain control of the market then, look how it turned up now.
Essentially they alienated their own person from the market direction. It was an act of suicide, imo.
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#5
TristanX
it is unconfirmed. Doubt that they build super expensive fab in US, where everything is much pricier than in Taiwan, and US gov won't protect it as much as US company.
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#6
Caring1
TristanX
it is unconfirmed. Doubt that they build super expensive fab in US, where everything is much pricier than in Taiwan, and US gov won't protect it as much as US company.
All at U.S. taxpayers expense no doubt.
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#7
Turmania
See all those companies over there when you turn the scree they get in order pronto.huwaei link will hurt TSMC.
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#8
TheinsanegamerN
mtcn77
This is not the pride involved. US is making a return into non-liberal policies. You have to have institutions for a republic, that is what Trump is doing. Democrats and their detached "ends from their means" economic policies are put into order. No more globalisation for you. You have to put your money where your mouth is.
Personally I believe that, much as other diseases have brought major changes to societies throughout history, Corona will bring about the end of Globalism in the end, or at the least severely weaken it. The logistical nightmare of putting all your eggs in one basket has been laid bare for the world to see, and industry is already accelerating their abandonment of China that was already occurring in small groups.

Globalism puts us all against the lowest common denominator. The theory of it "democratizing the East" have been thoroughly broken, its clear now that rather than raise the standard of living, that either everyone lives in abject poverty, or someone would have to break the Globalism train and prioritize their own economy, via tariffs, investments, bans on imports, VAT, ece.
Caring1
All at U.S. taxpayers expense no doubt.
Teflon Don could build it out of his own pocket and give all the base level employees $100K signing bonuses, and people would still find a reason to blame him for it. Our tax money is wasted on god knows how many pork projects and worthless causes and corrupt organizations, at least this would give us a tangible benefit.
mtcn77
I don't think it was the industry, it was the marketplace having the final say.
Many of the early foundries are now Superfund sites in the US. Processor manufacturing is a filthy process, and environmental controls made it far cheaper to produce in a country that doesnt care about its environment, see the industrializing Asia of the 70s and 80s. Same goes for many other industries, the slave wages and lack of environmental wages allowed them to make an absolute killing.

Now they are running into a problem. The industrialized China is demanding higher wages and its getting harder to fill factory jobs. IP theft is getting more expensive by the day. Countries like vietnam and taiwan are starting to care more about their environments and are getting very expensive to use. Places like Cambodia and Bangladesh lack the infrastructure to replace china and its workforce. Places like India are too protectionist, Africa's infrastructure and education are sorely lacking, and the middle east is a continual powder keg. The cheap labor pool ran out way faster then was predicted, and with an economic recession on the cards traditionally powerful markets like the US are looking rosier long term.
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#9
btarunr
Editor & Senior Moderator
It's official. Post updated with a press release.
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#10
starstarman
btarunr
Personal opinion: I think the US is also insulating itself from any military conflict affecting Taiwan. There have been elevated tensions between Taipei and Beijing. Then again, it would take a lot more than just moving TSMC. Quite a few indispensable Taiwan-based companies should spread their manufacturing outside the island, to places such as Japan, Vietnam, the Philippines, etc.
I'm interested in this concept. What do you think about the tensions will lead into that require evacuation from western Pacifics? And what about Samsung and the likes of South Korean tech giants?
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#11
R-T-B
TristanX
it is unconfirmed.
Look, I hate the current admin too, but this is pretty confirmed at this point.
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#12
mtcn77
R-T-B
Look, I hate the current admin too, but this is pretty confirmed at this point.
Personally, it is the same debate all over again.
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#13
R-T-B
mtcn77
Personally, it is the same debate all over again.
Humans take sides. We'd all do a lot better if we just tried to look at the facts and not the politics, but it's far easier said than done. Goes back to our monkey tribal days.
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#14
mtcn77
You know I will tie it into psychological complexes and refusing recognition where its most due in order to churn anticipatory motivational drives even further.
It is the same stuff really, being the master of the domain. You can prance all you want, however it, in the end, matters only if you are self-content, or not. Debasing your values has the opposite effect to the sensation you are seeking.
PS: misering.
I don't much understand(don't believe it, I'm being humble) why you lot enjoy extending beyond your reach. Yes, it is a good motivationally speaking, but it sure seems like having low standards which is ultimately bad on all of our accounts in the end. You need good company for good companionship.
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#15
xkm1948
Adding more jobs from tech to service is always good
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#16
btarunr
Editor & Senior Moderator
starstarman
I'm interested in this concept. What do you think about the tensions will lead into that require evacuation from western Pacifics? And what about Samsung and the likes of South Korean tech giants?
Again, my personal opinion: Jiang Zemin's lasting legacy within CCP is Hong Kong reunification. Xi Jinping (who considers Jiang his bete noir and political rival), wants to outdo him at everything. Things were looking up for Xi until COVID-19 came along and practically destroyed his international image, a disaster never helps a politician's image internally (even within CCP), even if they are successful in disaster-management. So the chances of Xi turning his attention to Taiwan are rather high. I don't think this puts U.S. Pacific territories in any particular risk, as long as there aren't hostilities between PRC and ROC, in which the U.S. intervenes. I don't think China will touch Korea, Japan, or Vietnam, as that would be a major escalation and open up many more fronts.
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#17
evernessince
R-T-B
Look, I hate the current admin too, but this is pretty confirmed at this point.
Just like that Foxconn plant in wisconsin or saving those carrier jobs, nothing is ever confirmed with this administration until the place is actually up and running. I don't want to see a "will do", I want to see a "have done".
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#18
Upgrayedd
Took a solo road trip to the Grand Canyon 2 years ago. This just makes me want to go back, holy schiit that place was cool.
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#19
sam_86314
Fingers crossed I can get a job there...

With how bad the job market is in my area, I welcome any new opportunities.

Wonder where in the state they'll build it...
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#20
R-T-B
evernessince
Just like that Foxconn plant in wisconsin or saving those carrier jobs, nothing is ever confirmed with this administration until the place is actually up and running. I don't want to see a "will do", I want to see a "have done".
Fair enough, but TSMC literally confirmed this one where I didn't see that with any of those others.
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#23
ARF
Upgrayedd
Took a solo road trip to the Grand Canyon 2 years ago. This just makes me want to go back, holy schiit that place was cool.
But, isn't building clean rooms in hot and dusty place much harder and with more requirements than building the same clean rooms in areas with clean air and better temperatures all year round ?

I mean isn't it better to have it in the Northern states ?
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#24
bogmali
In Orbe Terrum Non Visi
If you cannot help yourself from including your political bias when you post, don't do it plain and simple. My one and only warning
Posted on Reply
#25
FordGT90Concept
"I go fast!1!11!1!"
btarunr
Personal opinion: I think the US is also insulating itself from any military conflict affecting Taiwan. There have been elevated tensions between Taipei and Beijing. Then again, it would take a lot more than just moving TSMC. Quite a few indispensable Taiwan-based companies should spread their manufacturing outside the island, to places such as Japan, Vietnam, the Philippines, etc.
Definitely. The Pentagon is already finding Chinese spy chips in their military hardware. They want to move fast to get everything it can away from China. Taiwan is too close for comfort.

Keep in mind that the USA's military industrial complex supplies a great part of the world with military hardware (e.g. F-35). USA's military partners are counting on USA to keep Chinese espionage at bay and that's really hard to do when China is so good at making fakes and supply chains travel through China.
TristanX
it is unconfirmed. Doubt that they build super expensive fab in US, where everything is much pricier than in Taiwan, and US gov won't protect it as much as US company.
China thinks it owns Taiwan as per "One China" policy. As China becomes more and more hostile to the rest of the world (and its own people)...it's sowing fear among those people that may not know freedom much longer. Arizona...is out of China's reach. If China does seize Taiwan and all of Taiwan's manufacturing with it, TSMC will have a backstop to grow from.

I mean...AMD/NVIDIA/Apple will probably buy all the wafers out of that fab anyway so it's not like it's a very risky investment. Investing in Taiwan is much, much riskier right now.
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