Taiwan Semiconductor Manufacturing Company (TSMC) is significantly enhancing its chip manufacturing operations in the United States, fueled by a substantial $6.6 billion funding agreement with the Department of Commerce. This investment will facilitate the construction of a third facility in Phoenix, Arizona, as TSMC approaches the completion of its first site in the city and continues work on a second location. As part of its expansion strategy, TSMC will leverage subsidized financial support from the CHIPS and Science Act, a federal initiative designed to incentivize semiconductor manufacturers to relocate their production to America. Additionally, TSMC is poised to receive tax credits of up to 25% for investments surpassing $100 billion over the next five years.
President Joe Biden remarked on TSMC's renewed commitment, stating, “TSMC’s investment in Arizona represents a larger narrative about semiconductor manufacturing in America, bolstered by support from our leading technology firms to produce the essential products we depend on daily." In alignment with this initiative, the Commerce Department has projected that the U.S. aims to achieve a 20% share of global chip production by 2030.
The new Phoenix facility is set to manufacture advanced two-nanometer chips—technology that allows for a higher density of transistors on silicon wafers, resulting in enhanced performance in a smaller footprint. Production at this latest site is scheduled to commence by the end of the decade.
The initial Phoenix site is on track to start producing four-nanometer chips within the first half of 2025, while the second facility is anticipated to open in 2028. TSMC’s CEO, C.C. Wei, expressed excitement about the project's progress, stating, “We are thrilled by the development of our Arizona site to date and remain committed to its long-term success.”
Each of TSMC’s Arizona plants will feature state-of-the-art cleanroom environments—controlled settings crucial for semiconductor manufacturing—to minimize contamination risks. Remarkably, the Phoenix facilities will incorporate a robust water reclamation strategy, aiming to recycle up to 90% of the water used during production. TSMC is already in the process of designing an industrial water reclamation plant to support this initiative, recognizing that chip fabrication demands vast amounts of water to ensure the cleanliness of wafer sheets.
Mark Liu, TSMC's chair, noted the importance of the CHIPS and Science Act in enabling such a significant investment, stating, “This opportunity enhances our ability to provide the most advanced manufacturing technologies in the U.S. Our operations here will better support our U.S. customers, which include several leading technology firms, while also expanding our capacity for future semiconductor innovations.”
TSMC joins a growing roster of chip manufacturers benefiting from the CHIPS Act; Intel recently announced $20 billion in funding to develop and expand various facilities in states including Arizona, Ohio, New Mexico, and Oregon.
Currently, TSMC is a dominant force in the semiconductor sector, producing over 90% of the world's logic chips, including central processing units (CPUs) and graphics processing units (GPUs) across its facilities in Taiwan, Japan, and China. The company also announced plans last August to establish a chip manufacturing plant in Dresden, Germany. This initiative underlines the importance of the CHIPS and Science Act, introduced in August 2022, which seeks to restore the U.S.'s leadership in semiconductor production and address ongoing supply chain challenges.
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