TSMC will spend $3.5 billion to establish a subsidiary in Arizona

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TSMC is no longer taking orders from Huawei.

Taiwanese Semiconductor Manufacturing Company (TSMC) recently revealed it would spend $3.5 billion to establish a new Arizona subsidiary. In May, the foundry announced it would build a $12 billion plant in the same state.

The corporation also allocated $15.2 billion to upgrade and expand its existing production capacity.

TSMC’s Arizona Subsidiary

TSMC’s board of directors approved a proposal to expand its presence in the United States with a new subsidiary. However, the press release regarding the body’s new resolution did not detail its Arizona business plans.

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The company already maintains multiple facilities in the region, including its North American headquarters in San Jose, California. It operates multiple facilities in Delaware, including an engineering site, a solar products sales office, and two investment-related businesses. The firm also maintains a wafer fab in Washington and a design center in Texas.

That said, TSMC’s Arizona 5nm factory is one of its most important long-term projects.

Once online in 2024, it will utilize 5nm processing technology to fabricate 20,000 wafers per month. Its location and sophistication indicate it will likely produce cutting-edge products for important American clients like Apple and Qualcomm. That means the firm’s leadership expects the plant to be a major revenue contributor in the future.

For that reason, TSMC has an incentive to ensure its Arizona fab is one of its most productive and efficient facilities. By presumably embedding more staff and building new offices in the area, it can ensure the factory has the appropriate oversight.

TSMC’s $15.2 Billion Production Capacity Upgrades

TSMC’s recent board of directors meeting also saw the firm allocate $15.2 billion to production capacity improvements.

The foundry will direct $15.1 billion to install state-of-the-art production and packing equipment in its centers. TSMC set aside $1.247 million to build a Zero Waste Manufacturing Center in Taiwan. Its newly announced capital expenditure also earmarks money for establishing new fabs and more research and development.

In September, DigiTimes reported TSMC was considering launching a second 2nm fab in Taiwan. As the corporation just entered 5nm mass production this year, the new center would be two generations beyond state-of-the-art. The foundry would therefore need to expend considerable resources to meet the forward-looking facilities tools, software, and training requirements, and its new capital allotment would fit the bill.

One of the reasons TSMC became the world’s largest contract manufacturer is its best-in-class manufacturing capability. The firm’s fabrication technology and production capacity are an unmatched market advantage. With its new foreign and domestic buildout initiatives, it will likely pull even further ahead of its competitors.

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