TSMC’s Arizona factory begins manufacturing advanced chips

After years of planning, construction, geopolitical wrangling, and workforce challenges, Taiwan Semiconductor Manufacturing (TSMC), the world’s largest semiconductor foundry, will officially begin mass production at its state-of-the-art chip manufacturing facility in Phoenix in 2025. is scheduled to start. This factory is a symbol of that arrival. Assessing advanced chip manufacturing in the United States and testing whether the CHIPS and Science Act of 2022 will help stabilize the supply chain for the United States and its semiconductor industry Allies.

In late October 2024, the company announced that its Arizona plant’s yield was 4% higher than its Taiwan plant, an encouraging early sign of the plant’s efficiency. The current factory can operate at the 4-nanometer node, the process used to manufacture Nvidia’s most advanced GPUs. The second fab is expected to be operational in 2028 and will offer 2 or 3 nm node processes. Both the 4nm chip and the more advanced 3nm chip are expected to begin mass production at other TSMC factories in 2022, while the 2nm node is expected to begin mass production in Taiwan this year. In the future, there are plans to open a third factory in the United States using more advanced technology.

The chip manufacturing giant is currently scheduled to receive $6.6 billion in CHIPS Act funding to build its first factory in Arizona. But government funding isn’t the only reason semiconductor manufacturing is returning to the United States. TSMC makes 90% of the world’s advanced chips, and U.S.-based companies such as Apple, Nvidia, Google, Amazon, and Qualcomm rely on them. Chip shortages caused by the economic shock early in the coronavirus pandemic and Chinese President Xi Jinping’s increasingly aggressive rhetoric toward Taiwan have displeased TSMC’s customers and international policymakers.

TSMC announced its intention to invest in Arizona in 2020. “The CHIPS Act didn’t make that happen. Companies have pretty much moved on their own,” said Dan Hutchison, a semiconductor analyst at TechInsights. Big customers like Apple are asking TSMC to build factories elsewhere to minimize risk, he said.

Hutchison said having TSMC’s factories outside Taiwan is good for both its customers and Taiwan. Taiwan’s “silicon shield” against China has done its job. TSMC’s dominance in advanced chip manufacturing gives the United States and other countries a reason to support Taiwan. But Hutchison said the shield could become a target in the future. If the U.S. and its allies increase their reliance on Taiwanese chips, China could target Taiwan and cause significant damage to the U.S. economy. Hutchison said TSMC’s geographic diversification will make his country a less likely target. The company has also opened a factory in Japan and is currently building a factory in Germany.

TSMC workforce issues

Reactions to Taiwan’s Arizona plant have been mixed. A study published in Rest of World magazine in April 2024 found that American workers sent to Taiwan for a year of training complained of poor working conditions and inadequate training. That is being talked about. In the same article, Taiwanese workers complained that Americans were arrogant and did not have the work ethic appropriate for a semiconductor factory.

“TSMC is run like a military organization. Decisions are made from the top down and no questions asked,” said Chan Tai Hsieh, an economics professor at the University of Chicago who previously worked at the company. say.

On the other hand, many American engineers support Silicon Valley’s attitude of “acting fast and breaking things,” says the former Taiwanese lawmaker, who now works at the Hudson Institute in Washington for the Indo-Pacific technology industry. Jason Hsu, an expert on , DC, think tank. However, this is not easy to adapt to a process that can be interrupted by even a single grain of dust.

Hutchison says such culture clashes are to be expected, and TSMC appears to have weathered them. The problem may be that the company has set unrealistic goals and schedules. TSMC “viewed building a factory in the U.S. as a simple technology problem,” Hutchison says. “They think it’s a universal skill set, but it’s not universal. It’s very culturally and legally dependent.” For example, U.S. cities have building codes and He says the permitting process may be different and that’s not how it works in Taiwan. The United States is also facing a shortage of engineers and technicians as more factories open.

Intel and Samsung’s fab plans

TSMC is not the only company planning to open an advanced factory in the United States with help from the CHIPS Act. Samsung will also receive a potential $6.4 billion in funding to open a factory in Taylor, Texas, but the company says it could delay production from the second half of 2024 and open in 2026. Hsieh says culture clash is the least of Samsung’s problems. The company doesn’t have enough customers to buy the chips it makes in South Korea, and there probably won’t be any demand for the high-cost chips it makes in Texas, Hsieh said.

Intel is one of the biggest lobbyists for the CHIPS Act and has been pursuing a revival of its foundry business since former CEO Pat Gelsinger was appointed to the job in 2021. Intel’s technology is lagging behind, and like Samsung, the company is struggling. To find enough customers. However, Intel plans to open a new site in the United States. The expected $8.5 billion in direct funding from the CHIPS Act will go toward building advanced factories in Arizona and Ohio. Converting two New Mexico factories into packaging facilities. and purchased next-generation extreme ultraviolet lithography equipment for the company’s Oregon facility.

As of this article’s publication, it remains unclear how the Trump administration intends to change enforcement of the CHIPS Act. Unless major changes are made, Hutchison said, the opening of TSMC’s Arizona plant will test both the CHIPS Act’s ability to stimulate domestic manufacturing and the company’s international expansion. “What’s happening in Phoenix is ​​pretty amazing,” he says.