TSMC plans to build 5nm chip factory in U.S. to produce sensitive industry chips

TSMC, the world’s largest chip foundry, is planning to build the world’s most advanced chip factory in Arizona to help ease U.S. concerns about chip supply chain security. TSMC has negotiated and reached a deal with Donald Trump’s administration to make semiconductors in the U.S. to create jobs and to produce sensitive parts in the U.S. for national security reasons, people familiar with the matter said.

The plant is expected to cost billions of dollars, as soon as Friday.

“We are now actively evaluating plans to build a fab in the United States, or a chip factory,” TSMC Chairman Liu Deyin said on a recent conference call with analysts. There is a big cost gap at the moment, but we are working to close it. ”

TSMC is the largest and most advanced technology chip generation industry and commerce. Its plant is located mainly in Taiwan Province, China, and produces important parts designed by Apple. At the same time, most well-known semiconductor companies, including Qualcomm, Nvidia, Huawei and AMD, also rely on TSMC to produce chips. This has made TSMC a manufacturer of important components for many electronic devices, including smartphones, laptops, Internet-enabled servers, and corporate and government computer networks.

The agreement with the Trump administration requires TSMC to build a chip plant in Arizona by 2023, according to people familiar with the matter. It is unclear what support the project will receive from the federal government or Arizona.

The cost of building a cutting-edge chip factory is very high. TSMC, which has spent T$500 billion ($17 billion) on an advanced chip factory in Tainan, will mass produce parts for the new iPhone this year. The company plans to spend an additional $16 billion on capital spending this year.

If the federal government were to fund TSMC’s U.S. plants, it would mark a shift in policy for the Republican administration. Previously, the White House had rarely supported such direct industrial intervention, preferring to rely on the “invisible hand”. However, emerging trends may force the United States to reconsider.

The U.S. government is already providing grants or loans of billions of dollars to keep companies alive in the recession triggered by the new corona outbreak. The crisis also highlights how fragile global supply chains can be in the face of such shocks.

By making chips for many leading technology companies, TSMC has accumulated the technology needed to produce the smallest, most efficient and most powerful semiconductor devices, and the u.S. government is worried about concentrating such valuable capabilities in the hands of one company in Asia.

TSMC’s U.S. rival Global Foundries has abandoned its advanced chip manufacturing business, while chip giant Intel makes its own products. Intel tried to become a so-called foundry, but failed to gain the favor of its main customers. TSMC’s only current rival is South Korea’s Samsung Electronics.

TSMC plans to build 5nm chip factory in U.S. to produce sensitive industry chips