Taiwan Semiconductor Manufacturing Co., the world’s largest chipmaker, has agreed that its most advanced products will be made in Arizona starting in 2028. This is a major boost for White House efforts to bring manufacturing of semiconductors to American soil.
TSMC is upgrading its plans to build a fabrication facility, or fab in Phoenix, Arizona. This will allow it to produce the most cutting-edge chips of 2-nanometers.
This will be the second US facility for the company. The company will start production in 2019 at the first facility, also in Arizona, announced by Trump in 2020.
TSMC said Monday it would increase its investment total in the US to $65bn, to build a 3rd fab with 2nm technology or more advanced, that will be operational by 2020.
The US Commerce Department and the Taiwanese firm announced on Monday that Washington will provide support in the amount of $6.6bn as grants and up $5bn as loans.
The subsidies are part of the Chips Act which was passed by Congress in 2022. Its purpose is to increase US chipmaking. The Biden administration announced a agreement last month for Intel of Silicon Valley, which had pledged $100bn worth of new investment.
The commitment of TSMC helps the White House achieve its goal to bring 20 percent of advanced semiconductor manufacturing in the world onshore by the year 2030.
Fears of a Chinese invasion in Taiwan, where 90% of the latest chips are made, has prompted the US government to increase its efforts to boost domestic semiconductor production.
“TSMC will expand its manufacturing capability in Arizona so that, for the first ever, we can make, at scale the most advanced semiconductor chip on the planet right here in the United States of America,” stated US Commerce Secretary Gina Raimondo. “[We] are strengthening our national defense position massively.”
Mark Liu is the chair of the largest contract chipmaker. He said, “Our US operations enable us to better serve our US customers which include some of the world’s most leading technology companies.”
Artificial intelligence is driving the demand for more computing power. The latest plans are bringing the US semiconductor production closer to state-of-the-art.
TSMC had originally planned to use older technology in its US fabs than its most modern mass production in Taiwan.
By 2026, the majority of AI chips will be 3nm. This means that TSMC’s Arizona plant won’t have enough production capacity.
An engineer familiar with the manufacturing process said that by the time TSMC opens its second Arizona fab in 2028, Nvidia, and other AI chip manufacturers, will likely have migrated to the 2nm technology. According to a company executive, TSMC’s original plan for that plant to run on 3nm “didn’t seem right”.
The US hopes that the TSMC agreement will allow some of the most sophisticated chips used in AI to be partially made in the US before the end of this decade. This would reduce the reliance on Asian production by chipmakers like Nvidia and AMD.
“The chips made by TSMC” . . All AI is based on AI. Raimondo stated that tens of thousands leading-edge chip are needed to train one frontier AI model (such as OpenAI GPT4). These chips will now be manufactured in the United States of America, thanks to this announcement.
Analysts and industry executives said this claim was too extreme.
A person familiar with TSMC plans said that “having 2nm in a second fab does not mean Nvidia won’t be buying chips in Taiwan anymore,” but “it means they will have the option to issue a requirement that a specific amount of their chip come from this [Arizona] fab.”
TSMC continues to invest more in its home country than the US. Liu, who spoke to investors in January, said that TSMC will begin mass production of 2nm chips next year. It also plans to build multiple fabs using this technology at three different locations in Taiwan.