Chipmaker TSMC may be planning to build more chip factories in Arizona

(Reuters) — Taiwan Semiconductor Manufacturing Co (TSMC) is planning to build several more chipmaking factories in the U.S. state of Arizona beyond the one currently planned, three people familiar with the matter told Reuters.

TSMC, the world’s largest contract chipmaker, announced in May 2020 it would build a $12 billion factory in Arizona, an apparent win by the Trump administration in its push to wrestle global tech supply chains back from China.

TSMC is setting up a 12-inch wafer fabrication plant in Phoenix, and the facility is expected to start volume production in 2024, Taiwan’s investment commission of the ministry of economic affairs, which approved the investment, said in December.

TSMC manufactures the bulk of its chips in Taiwan and has older chip facilities in China and the U.S. state of Washington.

Three sources familiar with the matter, speaking on condition of anonymity as they were not authorised to speak to the media, told Reuters that up to five additional fabs for Arizona are being planned.

The initial fab is relatively modest by industry standards, with a planned output of 20,000 wafers — each of which contains thousands of chips — every month using the company’s most sophisticated 5 nanometre semiconductor manufacturing technology.

It is not clear how much additional production capacity and investment the additional fabs might represent, and which chip manufacturing technology they would use.

TSMC last month said it planned to invest $100 billion over the next three years to increase production capacity, though it did not give details.

One person with direct knowledge of the matter told Reuters the expansion was in response to a request from the U.S., but declined to provide further details.

“The United States requested it. Internally TSMC is planning to build up to six fabs,” the person said, adding that it was not possible to give a timeframe.

The Biden administration is preparing to spend tens of billions of dollars to support domestic chip manufacturing. Under existing legislation, foreign firms are eligible for those funds, but whether they will ultimately receive it is an open question.

A second person familiar with the plans said the company had already made sure there was enough space for expansion when they obtained the land for the first plant.

“It’s so they can build six fabs,” the source said.

The third person, from a TSMC supplier involved in the Arizona project, said TSMC had told them the plan was to build a total of six fabs over the next three years.

Reuters was not able to independently confirm the timeframe.

TSMC referred to comments by CEO C.C. Wei on an earnings call last month, saying the company was starting chip production in Arizona in 2024 with a 20,000 wafer per month 5-nanometer technology.

“But in fact, we have acquired a large piece of land in Arizona to provide flexibility. So further expansion is possible, but we will ramp up to Phase 1 first, then based on the operation efficiency and cost economics and also the customers’ demand, to decide what the next steps we are going to do.” Asked whether the planned expansion was because of a request from the United States, TSMC said it was “not sure” what was meant by “requests” coming from the U.S. side and that it will decide next steps based on operational efficiency, cost economics and customer demand.

“Once there is any official decision, we will disclose it accordingly.”

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