In May 2020 TSMC, the world's largest contract chipmaker, was reported to be preparing to build an advanced chip factory in Arizona, and on 15 May 2020 it confirmed the plan: a 5-nanometre fab costing about 12 billion US dollars, with production targeted for 2024. The move came as the US government grew concerned about its dependence on Asia for leading-edge chips. This post was written on 14 May 2020, the day before the announcement, and the original report is kept below as published, followed by the confirmed details and what happened later.
Key takeaways
- The plan was first reported on 14 May 2020 and confirmed by TSMC the next day.
- The confirmed plan was a 5 nm fab in Arizona, about 12 billion US dollars of spending from 2021 to 2029, roughly 20,000 wafers a month and more than 1,600 direct jobs.
- The report said production could start by the end of 2023 at the earliest; TSMC's announcement targeted 2024.
- The project grew a great deal after 2020, as the section on later developments shows.
The original report (14 May 2020)
Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract manufacturer of silicon chips, is set to announce plans to build an advanced chip factory in Arizona (source: The Wall Street Journal, paywalled) as US concerns grow about dependence on Asia for the critical technology. The plans come as the Trump administration has sought to jump-start development of new chip factories in the US, due to rising fears about the country's heavy reliance on Taiwan, China and South Korea to produce microelectronics and other key technologies.
TSMC is expected to announce the plans as soon as Friday, after making the decision at a board meeting on Tuesday in Taiwan, according to people familiar with the matter. The factory could be producing chips by the end of 2023 at the earliest, they said, adding that both the State and Commerce Departments are involved in the plans.
TSMC's new plant would make chips branded as having 5-nanometre transistors, the tiniest, fastest and most power-efficient ones manufactured at the time, according to a person familiar with the plans. TSMC had just started rolling out 5-nanometre chips for customers to test at a factory in Taiwan in recent months. It was unclear how much TSMC had budgeted or whether it would get financial incentives from the US to build. A factory capable of making the most advanced chips would almost certainly cost more than 10 billion US dollars, according to industry executives.
What TSMC confirmed on 15 May 2020
| Item | May 2020 report | TSMC announcement |
|---|---|---|
| Location | Arizona | Arizona (later sited in north Phoenix) |
| Process | 5 nm | 5 nm |
| Cost | More than 10 billion US dollars (industry estimate) | About 12 billion US dollars, 2021 to 2029 |
| Start of production | End of 2023 at the earliest | Targeted for 2024 |
| Capacity | Not stated | About 20,000 wafers per month |
| Jobs | Not stated | More than 1,600 direct high-tech jobs |
TSMC's own statement is at TSMC Announces Intention to Build and Operate an Advanced Semiconductor Fab in the United States (TSMC press release, 15 May 2020), which serves as a free alternative to the paywalled report.
Why it mattered
In 2020 almost all leading-edge logic manufacturing was in Taiwan and South Korea. US companies such as Apple, AMD, NVIDIA and Qualcomm designed their most advanced chips in the US but had them made in Asia, and the US Department of Defense also wanted a trusted domestic source. A US fab from the market leader was seen as a first step in reducing that concentration. The scale of the challenge is worth putting in numbers: a single fab of 20,000 wafers a month is a small share of TSMC's total capacity, which was on the order of a million 12-inch-equivalent wafers a month across all nodes at the time (TSMC reported annual capacity of roughly 12 million 12-inch-equivalent wafers around 2020).
What happened later
- 2021: construction began in north Phoenix.
- 2022: the US CHIPS and Science Act was signed in August. In December TSMC announced a second Arizona fab and raised its planned investment to about 40 billion US dollars, with the first fab moving to the N4 process.
- 2024: the US Commerce Department agreed up to 6.6 billion US dollars in CHIPS Act grants for TSMC Arizona, finalised in November. The first fab began volume production on N4 in the fourth quarter.
- 2025: in March TSMC announced a further 100 billion US dollars of US investment, taking its planned total to about 165 billion US dollars, including more fabs, advanced packaging and an R&D centre.
These later figures are as reported by TSMC and the US Commerce Department; check TSMC's newsroom for the current status of each phase.
FAQ
Was the first Arizona fab 5 nm as originally planned?
It was planned as 5 nm in 2020. TSMC later moved it to N4, an enhanced member of the same 5 nm family, before production started.
Did production start on time?
In 2023 TSMC said a shortage of skilled workers for installing specialised equipment would push production into 2025. In the end the first fab began volume production in the fourth quarter of 2024, close to the original target and about a year later than the earliest date in the May 2020 report.
Is this TSMC's first US factory?
No. TSMC already had a smaller, older fab in Camas, Washington (WaferTech), but Arizona is its first leading-edge site in the US.
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