TSMC gets $6.6 billion cash injection and plans a third US fab

TSMC also announced plans to build a third fab at its TSMC Arizona subsidiary, apparently bringing total capital expenditure for the site in Phoenix, Arizona to more than $65 billion.

Alongside the $6.5 billion in direct funding announced today, there is also another $5 billion in loans on the table, and TSMC plans to apply for US Treasury Department Investment Tax Credits of up to 25% of the qualified capital expenditure at TSMC Arizona.

The first of the three fabs is on track to begin production using 4nm technology in first half of 2025, we’re told, and the second fab will produce the cutting edge 2nm process technology with nanosheet transistors, as well as 3nm technology, beginning in 2028.

The third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade.

“The CHIPS and Science Act provides TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC Chairman Dr Mark Liu. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

“We are honored to support our customers who have been pioneers in mobile, artificial intelligence and high-performance computing, whether in chip design, hardware systems or software, algorithms, and large language models,” said TSMC CEO Dr. C.C. Wei. “They are the innovators driving demand for the most advanced silicon that TSMC can provide. As their foundry partner, we will help them unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona. We are thrilled by the progress of our Arizona site to date and are committed to its long-term success.”

A release from the US department of commerce said that thanks to investments such as this project with TSMC, the US is on track to produce roughly 20% of the world’s leading-edge chips by 2030.

It also quotes President Joe Biden as saying: “Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems. America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities. I was determined to turn that around, and thanks to my CHIPS and Science Act – a key part of my Investing in America agenda – semiconductor manufacturing and jobs are making a comeback.

“TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.”

TSMC announced its second chip fab in Arizona in December 2022. All in all, TSMC Arizona’s three fabs are expected to create 6,000 direct ‘high-tech, high-wage’ jobs. According to an analysis by the Greater Phoenix Economic Council, upping the investment to three fabs will create more than 20,000 construction jobs, and tens of thousands of indirect supplier and consumer jobs.

While job creation can no doubt be spun as a political win as election season nears in the US, the overriding motivation behind the US government pouring significant sums of money into the project is a desire to onshore chip manufacturing capabilities to US soil, in the midst of geopolitical tensions with China, and ultimately fears some have that at some stage it might move to annex Taiwan where TSMC’s main production base is.