May 14—The Taiwanese Semiconductor Manufacturing Corporation (TSMC) plans to establish a new semiconductor plant in Arizona, reports the Wall Street Journal. Earlier this week, the publication noted the White House engaged both TSMC and Intel in talks to increase U.S.-based microelectronics production.
The new manufacturing facility will reportedly be capable of fabricating chips by 2023.
TSMC’s Arizona Semiconductor Factory
According to the Wall Street Journal, TSMC’s board of directors has decided to build a factory in Arizona. The newspaper notes the foundry will publicly announce its expansion plans on Friday. The company plans to dedicate its new facility to manufacturing 5 nm chipsets, which it began producing earlier this year.
Reports emerged that the Trump administration officials met with leading semiconductor concerns on May 10 to discuss ramping up U.S. component production capacity. The White House reached out because it wants to lower America’s dependence on Asia as a microelectronics manufacturing hub. TSMC reportedly had discussed the matter with the Commerce and Defense departments and Apple, one of its largest clients.
At present, TSMC maintains an office in San Jose, California, and a fabrication facility in Camas, Washington.
Advantages to Building a U.S. Plant
In Q1, TSMC made NT$310.5 billion ($10.3 billion) in sales, the most quarterly revenue it has generated in a decade. Nonetheless, the foundry would be well served by establishing a new semiconductor factory in the United States.
For one thing, the corporation would need to create a host of new jobs to staff its plant. Doing so would put the firm in the good graces of the White House, a boon to any business operating locally. Besides, the corporation would likely receive a range of federal and state subsidies to establish the facility, thereby lowering its construction costs.
Furthermore, TSMC makes chipsets for several North American companies, including Qualcomm, Broadcom, and Nvidia. If the company had a U.S. processor plant, it could reduce its logistics costs significantly. Besides, maintaining a local factory would offer the corporation a degree of protection from supply chain disruptions like a trade war or pandemic.
Under the current market and geopolitical conditions, TSMC’s expansion of its U.S. production capacity is a shrewd business move.