Reuters: TSMC intends to increase investment in U.S. fabs European factory prospects are bleak

Sources close to the matter revealed that TSMC (2330), the world’s leading foundry, is considering injecting tens of billions of dollars to increase investment in the U.S. Arizona fab, the next fab in Phoenix using more advanced 3-nanometer technology process; but the prospects for investment in Europe to set up advanced fab development is slowing down.

Reuters reported at the beginning of the month, TSMC is expected to build up to six fabs in Phoenix, Arizona, the first will use 5 nanometer technology to produce chips. Currently, senior management is discussing whether to use a more advanced process for the second fab to produce 3-nanometer chips, ahead of the first fab process; sources said that the more technologically advanced 3-nanometer fab will cost $23 billion to $25 billion.

In the global chip shortage, coupled with Europe and the United States have proposed plans to subsidize semiconductor manufacturing, TSMC’s investment plans are attracting attention. TSMC announced last year that it would invest $10 billion to $12 billion to build a fab in Phoenix.

Sources said that with the Phoenix plant to be completed in the next 10 to 15 years, executives are planning the next generation of 2nm and smaller chip processes.

In terms of building factories, TSMC may compete with Intel and Samsung Electronics for U.S. government subsidies, with President Joe Biden pledging to invest $50 billion in funding to foster U.S. semiconductor manufacturing; the Senate will act as soon as this week.

Some government officials are concerned that subsidizing TSMC will benefit Taiwan more than the United States because TSMC may continue its research and development in Taiwan, but Washington’s subsidy plan does not include foreign companies.

Officials and industry sources said a strong domestic chip manufacturing industry is vital to the economy and national security; although U.S. chip majors such as Qualcomm and Pfizer dominate the world in their respective markets, most chips are made in Asia.

The report also said that the EU’s internal market executive committee Breton (Thierry Breton) and TSMC’s European general manager Marced (Maria Marced) last month for dialogue, although Breton publicly said that the conversation was a “good exchange,” people familiar with the matter pointed out that the two sides of the meeting is actually “very bad”.

TSMC spokesman said that the company does not rule out any possibility, but there is no plan to build a factory in Europe. On the other hand, most of the European chip and automotive industry opposes the proposal and prefers to subsidize the older generation of chips used in car manufacturing and currently in short supply.

In addition, TSMC’s large customers are mostly in the United States, such as Apple; European customers are mainly automakers, buying chips with less advanced processes. European and Middle East customers accounted for only 6% of TSMC’s revenue last quarter, far below the 67% of North American customers, and 17% of Asia-Pacific customers.

Sources said TSMC has not ruled out plans to build older chip plants in Europe to serve local automotive customers.