TSMC to drop $12 billion on Arizona plant

Chip-maker agrees to move high-tech production closer to important customers.

Asian chip-maker TSMC brings high-tech production to the US

Taiwan Semiconductor Manufacturing Company (TSMC) will build a facility in Arizona capable of producing chips using a 5-nanometre process.

The plan comes as COVID-19 has highlighted just how much the United States relies on global supply chains for technology production.

"This project is of critical, strategic importance to a vibrant and competitive US semiconductor ecosystem that enables leading US 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 said in a statement.

"The strong investment climate in the United States, and its talented workforce make this and future investments in the US attractive."

The creation of the Arizona facility follows the firm's decision to build its first US fab in Camas, Washington and design centres in Austin, Texas, and San Jose, California.

Construction is set to begin in 2021 with production in 2024. Capacity will be 20,000 semiconductor wafers per month.

According to TSMC, the investment will cost an estimated $12 billion from 2021 to 2029.

During an April 16 earnings call where TSMC confirmed media reports that it was actively evaluating whether to build a new US fab, Chairman Mark Liu said "there is a cost gap, which is hard to accept at this point" but "we are doing a lot of things to reduce that cost gap."

TSMC expects 5-nanometre demand to come from multiple markets. CEO CC Wei said during the same April earnings call that the firm was already seeing 5-nanometre demand from mobile and high-performance computing for 2021, but there could rising demand for Internet of Things and automotive as well.

"TSMC has performed really well in 7nm and 5nm," US-based Gartner Research Vice President for semiconductor foundries Samuel Wang told ZDNet in April.

He said a key reason for the nodes' high average selling price was a lack of competition.

"They are pretty much the only game in town," he said.

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