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TSMC confirms 3nm fab in Arizona to make neighbor Intel sweat a little more

Next-gen chip plant could appeal to customers for supply chain, national security reasons

Analysis TSMC founder Morris Chang has confirmed the Taiwanese foundry giant's plan to build a 3nm chip manufacturing plant in Arizona alongside its 5nm fab that is slated to open in 2024.  

Chang said on Monday while the 3nm fab plan isn't finalized, the advanced chip manufacturing plant would represent the second phase of TSMC's chip site in Phoenix, Arizona, according to Reuters.

If the Asian contract chip manufacturer sticks to its guns, the move would put more heat on Intel, which is trying to surpass TSMC and Samsung in advanced chip-making capabilities by 2025 and build a competing foundry business that eclipses Samsung's by the end of the decade.

Intel has announced plans to build next-generation fabs in Arizona and Ohio as part of a wider initiative to reshore chip manufacturing in the US. One of the stated appeals of Intel's new American fabs is that they will address the national security concerns of the federal government and businesses who want to keep their technologies out of foreign countries, particularly China and neighboring nations.

TSMC's plan to build a 3nm plant alongside its 5nm fab, which completed construction over the summer, shows that the Asian chipmaker is keen on making the US a bigger home for its advanced manufacturing capabilities, which, as of now, only exist in Taiwan and China.

The move also means TSMC could potentially compete with Intel on 3nm chips for US customers who need to keep manufacturing domestic for national security concerns. However, that assumes said US customers would be fine with a foreign company manufacturing their chips stateside.

Beyond national security concerns, the 3nm plant could help TSMC win business from companies and other organizations who want their chips made in the US to reduce their dependency on chipmakers in the East. After all, there is concern that if China were to invade Taiwan, it would upset the world's supply chain for chips, given that most advanced chipmaking happens on the island nation.

The US chip manufacturing expansion underway has reportedly prompted Apple, a significant TSMC customer, to plan a shift away from Asian countries for chipmaking. Bloomberg reported last week that Apple CEO Tim Cook said the iPhone maker plans to source chips from an Arizona fab in 2024 to reduce its reliance on Taiwan.

While Cook did not mention the name of the chip manufacturer it plans to use in Arizona, there's good reason to believe he is referring to TSMC, given the existing relationship between the two companies.

Intel does plan to open its own advanced fab in Arizona in 2024, but the company's contract chip manufacturing business, Intel Foundry Services, is still nascent and largely unproven for mass production needs. This makes a manufacturing tie-up between Intel and Apple less likely, at least in the near term, despite Intel CEO Pat Gelsinger's wish to win back business from Apple.

TSMC was set to begin volume production of its 3nm node, officially known as N3, in September. Intel, on the other hand, aims for production to begin in the second half of 2023 for its competing node, Intel 3, which was previously known as the company's 7nm+ process but was changed by the firm to reflect node naming standards.

While Intel will remain behind in advanced manufacturing capabilities for now, the chip giant has recently said it remains on track to surpass TSMC and Samsung in process performance by 2025. Whether the x86 giant can stick to its plans as it deals with a financial crunch and continued product delays remains to be seen. Though, to be fair, TSMC isn't immune to financial and production issues. ®

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