Phoenix, Arizona (USA) approved a development agreement with TSMC for a 5-nanometer wafer fab without objection. TSMC interviewed by Radio Free Asia on the 19th, said, happy to see it happen. Taiwan financial experts analysis, TSMC plant in the United States is the U.S. initiative, the U.S. commercial significance, the relevant plant plans will not be affected by the different political parties in power in the United States.
Taiwan Semiconductor Manufacturing Corporation (TSMC), the world’s largest foundry manufacturer of chips, known as “Taiwan’s Magic Mountain,” announced in May this year its intention to build a 5-nanometer wafer plant in Arizona. The government of Phoenix, Arizona, voted 9 to 0 on May 18 to approve the development agreement with TSMC. TSMC will sign a formal agreement with Phoenix once the site is selected, which is expected to be by the end of this year.
Reuters reports that under the agreement, Phoenix will allocate $205 million in city funds to improve infrastructure such as roads and water for the $12 billion semiconductor factory project.
Under the agreement, TSMC will build the new facility and create 1,900 new full-time jobs over a five-year period. Construction of the plant is expected to begin in 2021 with mass production in 2024.
Before the vote, Phoenix Mayor Kate Gallego called the agreement “a successful effort to bring together all levels of government to help Arizona become a leader in advanced manufacturing.
TSMC will construct a 5nm fab in Arizona, which will be the first advanced wafer fab in the U.S. TSMC has established a wholly owned subsidiary with a registered capital of $3.5 billion, and has officially launched a $12 billion investment plan.
TSMC has stated that the U.S. operating costs are high and that the federal government needs to subsidize the plant to close the cost gap.
In June, the U.S. Congress introduced a bill to provide more than $22.8 billion in subsidies to promote advanced semiconductor production in the United States.
TSMC: Happy to see it happen!
Radio Free Asia asked TSMC to verify the approval of this development agreement in Phoenix, Arizona, on 19 October, TSMC only said that it was pleased with the success of the agreement, the content of the agreement was not disclosed.
TSMC set up its first eight-inch plant in Washington State in 1995, and the five-nanometer plant in Arizona is the second plant set up in the United States, 25 years apart, market analysis, TSMC plant in the United States is about fifty percent higher than the cost of setting up a plant in Taiwan, mainly labor costs, wages and overtime, in addition to water, electricity, land prices, Taiwan are cheaper than the United States.
TSMC’s strategic value to the U.S. is unaffected by the change of party in power.
TSMC’s decision to locate in Arizona is an indicator of President Trump’s efforts to attract foreign investment to U.S. manufacturing, and if the Democratic Party’s Biden is indeed in power next year, Taiwan financial expert and chairman of Caixin Media, Hsieh Jin-ho, told Radio Free Asia that TSMC’s plans to set up a factory “will have no impact” because TSMC’s strategic consideration for the U.S. government is a national security level that transcends partisanship.
In the future, what will be produced will be mainly military specifications, and chips that cannot be produced outside the U.S. or overseas must be produced there. U.S. own needs, the United States in the future, the highest-order chip must be produced in the United States, TSMC near the U.S. production in the United States is a strategic consideration, commercial use is not much, said to help TSMC capacity in this area does not have much impact.”
Compared to Taiwan’s other major factory Hon Hai set up a plant in Wisconsin, Hsieh said: “The U.S. took the initiative to ask TSMC to set up a plant in Arizona, so his conditions will not be the same as Hon Hai. However, the costs associated with setting up a plant in the U.S. are not comparable to those in Taiwan, and there are still many problems to overcome.”
In an interview with Radio Free Asia, Taiwan’s Institute of Economic Research (IER) advisor Pei-Chen Liu also pointed out that Phoenix’s development agreement with TSMC shows no particular plans to change after the U.S. election.
The company’s newest product is a new generation of chips, which will be used in a wide range of applications, including the production of a wide range of chips for the production of a wide range of products.
Regarding the 5-nanometer chip, Pei-Chen Liu mentioned that it is the latest application in high-performance computing this year. The 5-nanometer chip will not be the most advanced until it is mass-produced in the U.S. in 2024, by which time Taiwan should have progressed to 2-nanometer and 1-nanometer,” he said. By that time, Taiwan should progress to two nanometers and one nanometer,” he said. It’s not quite clear yet, but some people say it will be used for military chips, and I think there will still be commercial ones.”
Expert analysis: TSMC’s U.S. plant predicts China will want more
In addition, the company’s products will be sold in the U.S. and Europe. In addition, from the subsequent stock performance, TSMC’s overall operating performance is still favored.
According to Liu Pei-zhen’s analysis, TSMC’s U.S. plant has three major significance, including consolidating 60% of North American customers, global layout, and in addition, to clamp down on Intel and Samsung’s competition in the United States. In other words, there is a medium- to long-term need for TSMC to set up factories in the U.S.,” Liu said.
The epidemic and the U.S.-China technology war highlight the need for a local supply chain, which the U.S. lacks, and the need for a capable foundry to set up a plant in the U.S. to supply its needs at any time, especially for military chips. In the U.S.-China tug-of-war, relative China may also have a pull on TSMC.
Liu Pei-zhen mentioned: “There was an expectation that China would be more demanding (of TSMC),” he said. That is, after 16 nanometers, since you’re already going to three nanometers, can you do an upgrade on your Chinese part? Maybe the next step China will ask for is to see how cross-strait relations change in the future, to see if the Taiwanese authorities will allow the more advanced parts to go over?”
According to the report, Phoenix’s development agreement with TSMC includes the allocation of $205 million in city funds to improve infrastructure such as roads and water sources. According to Pei-Chen Liu, TSMC could seek more tax credits and other investment incentives to reduce production costs.
In addition, Japanese media reported that Toshiba is considering selling two of its semiconductor plants to UMC, a major Taiwanese semiconductor manufacturer. UMC said it does not comment on market rumors, but is open-minded about anything that would benefit shareholders’ interests.
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