TSMC says its second factory in Arizona will be delayed, marking another setback for the world’s largest chipmaker and its role in US President Joe Biden’s bid to boost American manufacturing. The facility will now be operational in 2027 or 2028, compared to previous expectations of a 2026 start, according to Chairman Mark Liu.
“There will be a gap,” he told analysts on an earnings call Thursday. Liu said construction on the shell of the factory had begun, but the Taiwanese chipmaking titan needed to review “how much incentives … the US government can provide.”
The company is in close contact with US officials on the matter, including discussion of tax credits, he added. It’s the second time TSMC (TSM), the world’s largest chipmaker, has been forced to push back its plans in the western US state.
It announced in 2022 that it would build a second semiconductor plant in Arizona, adding to plans for an existing fab and raising its overall investment in the state from $12 billion to $40 billion. A fab refers to a semiconductor fabrication plant.
The investment has previously been lauded by Biden as a sign that US manufacturing “is back.” But last year, the company said production at its first fab would be delayed from 2024 to 2025, due to a shortage of specialist workers.
The company may also be rethinking which type of products will be made. Originally, TSMC had announced the first facility would produce 4-nanometer chips, and the second would make 3-nanometer chips, which are among the most advanced semiconductors.
But on Thursday, Liu suggested that plans for its second fab were in flux, saying the size of government incentives would determine the kind of technology deployed. The first facility is still on track for production of 4-nanometer technology, which will start in the first half of 2025, said the executive.
Global expansion
TSMC, based in the Taiwanese city of Hsinchu, produces an estimated 90% of the world’s super-advanced semiconductors and supplies to global tech giants such as Apple (AAPL) and Nvidia (NVDA).
It mass produces components that are vital to the running of everything from smartphones to washing machines.
The company has typically kept its most advanced manufacturing at home in Taiwan, but it has been expanding abroad in recent years due to commercial pressure and encouragement from a number of governments. Last year, it announced a factory in Dresden, Germany, its first in Europe.
The manufacturer has been building a facility in Japan, which will officially open next month, Liu said Thursday. Mass production at the plant, located in the prefecture of Kumamoto, remains on schedule for the fourth quarter of 2024, he added.
TSMC is also considering whether to open a second facility in Japan.
“The second fab in Japan is in serious evaluation stage,” and the firm is holding talks with the government, according to Liu. Liu told analysts the overseas expansions were in response to “today’s fractured globalization environment.”
On Thursday, TSMC said it had weathered a challenging year in 2023 due to the weakening global economy, which weighed on demand. But “our business has bottomed out,” CEO C.C. Wei said on the call.
The company shared a much brighter outlook for the year ahead, projecting a 20% jump in 2024 revenue. It cited a boon for the global semiconductor industry from “the rising emergence of generative AI-related applications,” which include popular platforms such as ChatGPT.
TSMC’s shares climbed 9.8% in New York on Thursday following its earnings report, and rose by 6.5% on Friday in Taipei.
— CutC by cnn.com
