TSMC to Build and Operate 5nm Fab in US

Article By : Alan Patterson

TSMC will build a 5nm fab in Arizona with support from that state and the U.S. government...

Taiwan Semiconductor Manufacturing Co.(TSMC) said it will build a 5nm fab in Arizona with support from that state and the U.S. federal government.

The facility will have a 20,000 wafer-per-month capacity, create over 1,600 jobs directly and thousands more indirect jobs, the company said in a press statement today.

The announcement comes following press reports that the U.S. government was pushing TSMC to build a fab in America. As the U.S. aims to impede China’s growth in the technology industry, TSMC faces potential U.S. restrictions on sales of its most advanced chips to Chinese companies such as Huawei, the world’s second-largest smartphone maker.

“TSMC’s motivation in building a U.S. fab is to gain favor with the United States administration,” Wedbush Securities Senior Vice President Matt Bryson said in emailed comments to EE Times. “Recent newsflow suggests greater domestic fab capabilities are a U.S. priority.”


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The plan supports the pledge of U.S. President Donald Trump to bring more overseas jobs to America. The effort to slow China’s advance in 5G equipment production is also one of Trump’s initiatives aimed at protecting U.S. industry.

Construction of the fab is scheduled to start in 2021 with production targeted to begin in 2024, TSMC said in the press statement. TSMC’s total spending on this project, including capital expenditure, will be approximately $12 billion from 2021 to 2029.

“This U.S. facility not only enables us to better support our customers and partners, it also gives us more opportunities to attract global talents,” TSMC said. This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem that enables leading U.S. companies to fabricate their cutting-edge semiconductor products within the United States and benefit from the proximity of a world-class semiconductor foundry and ecosystem, the TSMC statement said.

How much support is the U.S. throwing behind this?
TSMC didn’t disclose the terms of the agreement with the Arizona and U.S. federal governments. The deal could have broad implications for companies in the semiconductor ecosystem.

If this agreement helps TSMC negotiate more favorable U.S. policies and in particular gets the U.S. administration to back away from its rumored proposal to curtail supply of semiconductors made with U.S. equipment to Huawei, not only should this deal be viewed as good for TSMC, but it also has significant positive implications for the broader U.S. chipmaking equipment industry as they may avoid getting cut out of the China/Huawei supply chain, Bryson said.

There may have been other less valuable bargaining chips on the table.

“If the agreement for instance just allows TSMC to keep its U.S. military chip business and or achieve low-cost production tied to promised subsides or other benefits offered by Arizona or the U.S. to TSMC to build a U.S. based facility, the benefit is minimal,” Bryson said.

Shortly after the election of President Trump, when questioned about the company’s interest in investing in the Unted States, TSMC’s previous chairman, Morris Chang, expressed reluctance. The ability of the company to deploy engineers quickly between its fabs in Taiwan is a competitive advantage that the company would not enjoy in the United States, he said.

TSMC still appears to have some reservations.

U.S. adoption of forward-looking investment policies to enable a globally competitive environment for a leading-edge semiconductor technology operation in the U.S. will be crucial to the success of the project, TSMC said in today’s statement. U.S. policy will also provide the confidence that this and other future investments by TSMC and its supply-chain companies will be successful, the company added.

In the Unted States, TSMC operates a fab in Camas, Washington and design centers in both Austin, Texas and San Jose, California. The Arizona facility will be TSMC’s second manufacturing site in the Unted States.

Outside Taiwan, TSMC also has a 12-inch fab in Nanjing, China and an 8-inch fab in Shanghai. In compliance with Taiwan regulations, TSMC keeps production technology at the Chinese fabs at least one generation behind its state-of-the-art 5nm technology in Taiwan.

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