TSMC scores $11.6B funding infusion for Arizona fabs, now plans for third plant

Nevermind the fact that the first two plants are facing delays and costs are rising – build, build build!

With a new Biden administration funding agreement in hand, chip giant TSMC plans to build a third chip fabrication plant in Arizona despite facing delays with the two it's still building.

The administration announced that the Department of Commerce and TSMC's Arizona subsidiary had signed a preliminary memorandum of terms for the federal government to provide $6.6 billion in direct funding for the Taiwanese company's desert fab projects. The memorandum also includes an allowance for $5 billion in loans. 

Both awards will come out of the CHIPS and Science Act's funding pools, though it's also important to note that the Commerce-TSMC agreement is non-binding at this point.

"America invented [semiconductors], but over time, we went from producing nearly 40 percent of the world's capacity to close to 10 percent, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities," President Joe Biden said of the agreement. Thanks to my CHIPS and Science Act … semiconductor manufacturing and jobs are making a comeback." 

According to TSMC, its now three-fab project in Arizona will create 6,000 "high-tech, high-wage" jobs, along with more than 20,000 construction jobs and "tens of thousands" of indirect roles in the Phoenix area. 

The plan for the first fab, construction of which began in 2021, has long been to produce 4 nm chips. That fab was supposed to come online this year, but TSMC said in 2023 the plant was being delayed until at least 2025 because of a shortage of skilled workers.

Per today's announcements, TSMC plans to bring the fab online by the first half of 2025. 

TSMC said in 2022 that it was planning a second fab in Arizona to produce 3 nm chips that was due to come online in 2026. Today the company said it was adding 2 nm production capabilities to the second plant, and said it would begin fabricating chips in 2028.

The third fab, announced today, "will produce chips using 2 nm or more advanced processes" and is supposed to come online by the end of the decade. 

Of course, all of those plans are subject to change – especially because the $11.6 billion in fab funds announced today aren't guaranteed. 

As mentioned above, TSMC's Arizona projects have faced multiple delays. Both Intel and TSMC have plans to build chip plants in Arizona, but alongside a shortage in skilled workers, both are reportedly facing delays from suppliers due to surging materials and labor costs.

According to Nikkei, materials costs and a shortage of construction workers means the cash needed to build the Arizona fabs has ballooned to four or five times the cost of a similar plant elsewhere in the world. To make matters worse, the prices in Arizona look to be beyond what TSMC and Intel had originally planned to pay. 

Whether additional funding and a third construction project can create the 20,000 jobs TSMC is hoping to bring in to get its plants built is unclear, but TSMC seems to think it'll be fine.

"Even though we encounter some challenges in Arizona for our first fab construction, we are still the fastest player, from ground breaking to equipment move-in, among peers in the US," TSMC Chairman Dr. Mark Liu told The Register in an emailed statement. "The workers in Arizona learn things quickly. We believe the construction of our second fab will be much smoother." ®

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