Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly expanding its multi-billion chip manufacturing unit in Arizona. Company founder and CEO Morris Chang said the new fab will manufacture advanced 3nm node chips.
TSMC, the world’s largest contract semiconductor manufacturer, responsible for more than half of global production, is nearing completion of a phase two expansion of its manufacturing facility currently under construction in Phoenix, in Arizona.
“It has almost been finalized – at the same site in Arizona, phase two. Five nanometers is phase one, 3 nanometers is phase two,” Chang told reporters in Taipei, Taiwan, as reported by Reuters.
Building the 5nm factory in Arizona is expected to cost TSMC $12 billionwho is part of the company $44 billion capital budget for 2022, announced in January this year during the company’s fourth quarter 2022 earnings call. Previously, in April 2021, TSMC announced a $100 billion investment to expand production capacity globally over the next three years.
However, this is the first major undertaking that TSMC would undertake in the United States since the US Congress passed the CHIPS and Science Act and the White House. signed into law in August 2022. The legislation sparked an American gold rush, except with chips, and not only reinvigorates American manufacturing capacity, but also reverses opportunities lost in the Orient in previous decades.
A growing Chinese military threat to Taiwan, which the former considers a province, would also reduce US dependence on what has become an economic and geopolitical competitor. Currently, 70% of semiconductors come from Taiwan (63%) or China (7%).
An expansion into the United States would also help TSMC compartmentalize its business while still benefiting from production and R&D incentives, tax credits, and more. Moreover, investing in the United States is a necessity for TSMC, the reasons for which go beyond geopolitics and incentives. “Not only do I believe, but I know for a fact that the cost of manufacturing chips in the United States will be at least 55% higher than in Taiwan,” Chang said.
“But that doesn’t preclude moving some of the capacity to the United States. The chip manufacturing process we’ve adopted is the most advanced of any company in the United States, and that’s very important for the US TSMC claims its 3nm node is 15% faster, 30% more efficient and offers up to 70% higher logic density than its predecessor.
For the company to ensure it retains the lion’s share of global chipmaking, TSMC would need access to 3nm and related technology, exports of which have been banned by the government. American just one week after the signing of the CHIPS law.
The US government has instituted export control on four technologies, namely, gallium oxide and diamond-based substrates of ultra-wide bandgap semiconductors, electronic computer-aided design (ECAD) software used in the development of integrated circuits with transistor structure at all around grid field effect (GAAFET), pressure gain combustion (PGC) technology used in rockets and other hypersonic systems Section 1758 of the Export Control Reform Act (ECRA).
Now, TSMC has surprisingly announced that its 3nm nodes will take advantage of FinFET structure instead of GAAFET. However, lack of access to GAAFET, an advanced American semiconductor technology that the company has announced it will use for 2nm in chips, could thus derail TSMC’s dominant position in the market.
TSMC or any other company in any Wassenaar Arrangement country is prohibited from transferring or selling 3nm technology to non-Wassenaar countries such as China. Microchips are dual-use goods and technologies and are ubiquitous in conventional weapons such as missiles, planes, ships, etc., and fall under the arms control agreement.
TSMC, which this week sold a $4.1 billion stake in Warren Buffett’s Berkshire Hathaway, could therefore have expanded to any other country under the Wassenaar arrangement instead of the United States. United. of TSMC’s operations. Plus, the $52 billion CHIPS Act sweetens the decision.
Companies that receive federal funding under the CHIPS Act must also respect certain restrictions. These include the inability to expend capital to develop advanced factories in China, produce chips for the US market or do business in China for ten years. The U.S. Department of Commerce is expected to share all bans by February 2023.
Arizona is also the location of Intel’s new $20 billion Foundry Service unit. The company will manufacture Intel3 (5 nm) and Intel 20A chips (1 nm = 10 Å, first of the Angstrom era) in Arizona.
According to a Bloomberg report, Apple will source the 3nm chip from Arizona. The iPhone maker is rumored to be moving its M2 (Mac) and A17 (iPhone) chips to the 3nm node.
Image source: Shutterstock