News » Technology News » Taiwan’s TSMC to build Arizona chip plant as U.S.-China tech rivalry escalates

Taiwan’s TSMC to build Arizona chip plant as U.S.-China tech rivalry escalates

by Rahul Chauhan
2 minutes read

Taiwan Semiconductor Manufacturing Co Ltd, the largest contract chip manufacturer, said it plans to build a $ 12 billion factory in Arizona as a clear victory for Trump’s efforts to wrestle global technical supply chains back from China. The plan, which will be one of the largest inbound US investments ever and will create more than 1,600 jobs, will come when US President Donald Trump becomes more critical of China’s trade practices and Beijing’s treatment of the new corona virus ahead of the US presidential election from November 3. #

Trump has long pledged to bring production back from abroad, and now a strong economic slump caused by the new corona virus is causing government-wide pressure to end U.S. manufacturing and supply chain dependence on China. US Secretary of Commerce Wilbur Ross praised the deal as “another indication that President Trump’s policy agenda has led to a resurgence of US production.”

TSMC is a major provider of US technology giants such as Apple Inc and Qualcomm Inc, as well as Chinese companies such as Huawei Technologies, which have blacklisted Washington. “This project is critical, strategic, to a vibrant and competitive US semiconductor ecosystem that enables leading US companies to manufacture their advanced semiconductor products within the United States,” said TSMC.

While the plan is huge in terms of foreign investment in the United States, it is small by TSMC standards. For 2020, TSMC’s capex plan is $ 15-16 billion. The Taiwanese chipmaker said the plan was to build the factory in nine years.

An official from the United States Department of Commerce said that TSMC’s decision to locate the factory in the United States was “goodwill” for the department, the law that would severely restrict sales of TSMC chips to Huawei, if implemented. Credit Suisse analysts said proposed restrictions could threaten Huawei’s 14% of TSMC’s sales, increase tensions between the US and China, and delay the rollout of the next-generation 5G mobile network.

Shares of TSMC, the world’s most valuable semiconductor company with a market capitalization of $ 255 billion, more than Intel Corp., rose more than 1.5% on Friday morning, outperforming a 0.8% gain on the main Taiwanese stock market. “While it is difficult to be sure, we believe that TSMC, which announces a US Fab, could at least remove the threat of further Huawei restrictions in the very near future,” said JP Morgan analysts.

ADVANCED CHIPS The factory, TSMC’s largest overseas investment, will produce the most advanced 5 nanometer chips, which can be used in advanced defense and communications equipment.

TSMC produces most of its chips in Taiwan and has older chip facilities in China and Washington State. The chips power Apple & # 39; s iPhones, and the iPhone maker is working closely with TSMC to be the first to take advantage of new developments in its chip-making processes.

US Secretary of State Mike Pompeo said chips from the new TSMC factory will power everything from artificial intelligence to 5G base stations to F-35 fighter jets. Semiconductors play a key role in both consumer electronics and defense equipment. The vast majority of the most advanced chips are made in Asia, which has raised concerns among U.S. officials, as a strategic rivalry with China deepens the origins of the deadly coronavirus.

While Intel has large manufacturing operations in the United States, it only supplies its own chips instead of making them for external customers. The Trump administration has held talks with both Intel and TSMC to build a factory in the United States, and Intel said last week it was in talks with the Department of Defense about improving domestic microelectronics resources and related technology.

The TSMC announcement is not expected to derail the Pentagon’s efforts to strengthen the microprocessor supply chain, despite the Commerce Department working independently on the TSMC deal, a person familiar with the matter said. Apple and Intel declined to comment.

TSMC said construction of the facility in Arizona would begin in 2021, with production in 2024 as its goal, and it could handle up to 20,000 silicon wafers per month. Each wafer can contain thousands of individual chips. The investment will be made from 2021 to 2029. The Wall Street Journal first reported the final details of TSMC’s plans.

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