Report: TSMC to increase spending on Arizona chip factory to $35 billion

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TSMC is no longer taking orders from Huawei.

Taiwan Semiconductor Manufacturing Company (TSMC) reportedly wants to invest around $35 billion in the production facility it is establishing in Arizona.

Last year, the corporation confirmed it would spend $12 billion to establish a 5nm chip factory in the United States. However, Business Korea stated the foundry intends to more than triple its investment to establish a much larger complex. Though the move would be expensive, the firm would receive several benefits from building an American Gigafab.

As of this writing, TSMC has not publicly commented on making any changes to its production capacity expansion roadmap.

TSMC’s Arizona Fab Expansion Plans

Last spring, TSMC planned to build a state-of-the-art but relatively modest fabrication center in the Copper State. The facility, slated to begin operations in 2024, would host 1,600 employees and produce 20,000 silicon wafer starts per month (WSPM). It said it would spread out the expense of constructing the center from 2021 to 2029.

At size and output capability, the factory would definitely help the foundry serve its many US-based clients.

The firm’s new plan involves building six manufacturing plants in its Arizona campus. Once fully equipped, the complex would be classified as a Gigafab, meaning it could make 100,000 WSPM. The company made an agreement with local leaders to secure enough water to upscale the site and $205 million in subsidies.

TSMC makes chips designed by many large American corporations, including Apple, Advanced Micro Devices (AMD), Nvidia, and Qualcomm.

Why TSMC Would Want To Upscale its Arizona Fab

The most direct benefit TSMC would derive from expanding its U.S. production capacity is better serving its U.S. customers. Because it utilizes some of the world’s most advanced chip-making processes, the corporation services are in extremely high demand. For example, it filled all of the bookings it had open after ending its business relationship with Huawei in a little over a month.

By expanding its cutting-edge production resources, it could continue its 2020 trend of shattering its previous earnings records.

The company’s decision to establish a Gigafab in the U.S. soon is a smart move financially. Last month, the White House ordered a 100-day review of America’s supply chains, including its semiconductor ecosystem. President Joe Biden also called for $37 billion in federal funding to address the global chip shortage. While its Arizona complex cannot be set up in time to help with the crisis, it can bolster the nation’s component independence.

Given the current situation, TSMC should have no problem landing billions of dollars in government financial aid.

Finally, the company could lessen the impact environmental disruption has on its operations by launching an American Gigafab. Portions of its home country are experiencing a drought due to a recent lack of rainfall. In response, Taipei asked large firms to slash their water consumption by 7 to 11 percent.

The chipmaker started trucking in water to sustain its local facilities sites, but its manufacturing work could be disrupted if the drought persists.

TSMC would be less vulnerable to future Taiwanese water shortages if it could shift production to the U.S. Since the move has so many upsides, the foundry tripling its Arizona fab investment seems like a no-brainer.

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