(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. is laying the groundwork for a second US plant next to a $12 billion complex it’s building, a major expansion that will boost American efforts to bring advanced chipmaking home if it goes ahead.
The world’s largest contract chipmaker has begun construction on a building that may eventually house its second fabrication facility in Arizona, employing resources already deployed for the current project, the company said in a statement. But it hasn’t made a final decision on whether to proceed with a new plant, TSMC said.
The Biden administration is trying to attract investments in US chipmaking, part of efforts to counter China’s ambitions and secure components vital to national security. That effort accelerated after widespread shortages that began around late 2020 and 2021 drove home how chips were central to the production of everything from cars to smartphones.
But a second US fab would represent a major outlay at a time TSMC is reducing capital spending, as a global downturn deepens and hurts demand for electronics. The Wall Street Journal reported earlier that TSMC was set to unveil an investment in another American factory similar to its first, $12 billion project.
“In light of the strong customer demand we are seeing in TSMC’s advanced technology, we will consider adding more capacity in Arizona with a second fab based on operating efficiency and cost economic considerations,” TSMC said in its statement. “This building enables us to remain flexible for future expansion, but we have not arrived on a final decision on a second fab.”
Washington, which is dangling incentives of some $50 billion for local projects, has hailed TSMC’s Arizona expansion as a triumph in endeavors to bring advanced chipmaking back to America. But the Taiwanese company has said it cost much more to fabricate semiconductors in the US, though that higher expense was manageable with state support.
TSMC, whose production sites are mostly in Taiwan, has started to diversify over the past year or so to help meet demand in major countries seeking to bolster domestic semiconductor production. It joins rivals such as Samsung Electronics Co., which is establishing a $17 billion fab in Texas.
TSMC is building a $7 billion facility in Japan, and is also in early talks with the German government about potentially establishing a plant in the European country, Bloomberg News has reported.
A major expansion to TSMC’s US plans would boost the Biden administration’s overall efforts to ensure the country remains ahead of China in the semiconductor race.
Apart from driving incentives for local chipmaking, the US has imposed a plethora of restrictions on the shipment of advanced technology to China, aiming to throttle the flow of chips that aid Beijing’s military and tech sector.
Xi Jinping, in a landmark address last month, pledged tech self-reliance to prevail in a battle with the US for technological supremacy -- which many took as a sign Beijing will redouble policy and financial support for sectors such as AI and chips.