New TSMC chip factory to be constructed in Arizona

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A new Taiwan Semiconductor Manufacturing Co (TSMC) chip factory is set to be constructed in Phoenix, Arizona. The US$12 billion computer chip factory is one of the many among those that are competing for some of the US$54 billion in subsidies for the chip industry that advanced in the United States Senate and companies such as Samsung and Intel are aiming for a share. C.C Wei, the company CEO said that plans for the factory remain on track to start volume production of chips using the company’s 5-nanometer production technology starting in 2024.

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There has been a great shortage of semiconductors this past year and this has made governments around the globe look into supporting and building local chip capacity to solidify their supplies. Gina Raimondo, the U.S. Commerce Secretary said that while the Biden administration is working with Taipei and TSMC to address the chip shortage, the country is also looking to reduce U.S. dependence on Taiwan. She added that the subsidy would help to build another six or seven chip plants, “so we won’t be so vulnerable to relying overly on one company or one country.” C Wei stated that TSMC has developed a different version that will be used by automakers for advanced applications like artificial intelligence, though the new offering is unlikely to alleviate the current chip shortages because the shortages are of less advanced chips. The company last month said that it would spend US$100bn over the next three years to increase chip production capacity.

One may wonder why companies such as Intel and TSMC have chosen such arid areas to construct their chip factories and one reason is that Arizona is a seismically stable state and has a low risk of natural interference, making it more appealing to the manufacturers. “A chip factory cannot shake, not even a microscopic amount,” said Glenn O’Donnell, vice president, and research director at analyst firm Forrester. He added that they set such factories into the bedrock to keep them still. “Even a 0.5 Richter shake can ruin an entire crop of chips.”