TSMC's Second Factory in Arizona Delayed as US Grants Remain in Flux

Executives said the chipmaker's second plant in Arizona will now open in 2027 or 2028.

Bloomberg News

January 22, 2024

2 Min Read
TSMC's second plant in Arizona will now open in 2027 or 2028
Image: Bloomberg

(Bloomberg) -- Taiwan Semiconductor Manufacturing Company announced another delay to its $40 billion site in Arizona, dealing a further blow to the Biden administration’s plans to boost manufacturing of critical components on US soil.

Executives said their second plant in Arizona, whose shell is now being built, will start operations in 2027 or 2028, later than TSMC’s prior guidance of 2026. That’s after the company in July announced a delay to the first site, now due to start making 4-nanometer chips only in 2025, citing a lack of skilled labor and higher costs.

“Our overseas decisions are based on customer needs and the necessary level of government subsidy, or support,” Chairman Mark Liu said during TSMC’s earnings conference in Taipei on Thursday. The company’s upbeat outlook for the year drove a rally in chip stocks across Asia on Friday, with TSMC shares up as much as 6.3%.

Previously, TSMC had said it will make 3nm chips at the second factory, which is expected to be more advanced than the first in Arizona. But on Thursday, the company said that incentives from the US government will help determine how advanced the tech inside will be, adding uncertainty to the project’s outcome.

Because of the setback with the first fab, TSMC has delayed its second factory too, according to Chief Financial Officer Wendell Huang. The Taiwanese chipmaker is in talks with the US government about incentives and tax credits, Liu said. He also reiterated TSMC was working with the local union and trade partners in the state. The company has faced resistance to plans to bring in technicians from Taiwan for the construction project.

Pushing back the start of the second fab could mean a delay of as much as two years, time enough for semiconductor tech to advance by one generation.

More than a year after US President Joe Biden signed the Chips and Science Act into law – which is supposed to provide tens of billions of dollars in subsidies to chipmakers expanding in the US – the administration has yet to hand out any grants to major chipmakers like TSMC or Intel Corporation It has so far only provided some modest financial support to two minor industry players.

By contrast, TSMC publicized its plans for a more modest plant in Japan later than its Arizona project, but it has already received funds from the Japanese government. The facility is on track to start production in late 2024, according to the latest update the company provided.

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