TSMC expansion would secure state's spot as a national chips leader. Trump tariffs and geopolitics played a role, tech analyst says
PHOENIX — Computer chip giant TSMC plans to invest $100 billion in Arizona semiconductor factories over the next four years, securing the state's place as a national leader in chip manufacturing.
RELATED: Multibillion-dollar Taiwan Semiconductor plant sparks North Peoria development boom
The expansion plan would ramp up TSMC's chip production well beyond its current plan for a vast tract of the Sonoran Desert in northwest Phoenix:
-Three new chip-making plants would be built, double the number under an existing $65 billion plan. The first TSMC plant in Phoenix started mass producing advanced chips earlier this year, five years after the world's largest chipmaker announced it would manufacture semiconductors in Arizona.
-TSMC would build two packaging plants -- the final assembly for computer chips -- and a research and development facility.
-The company projects 40,000 construction jobs over four years and "tens of thousands" of semiconductor related jobs.
Here's what you need to know about the expansion:
The planned expansion could supercharge a multibillion-dollar housing and commercial development boom in the northwest Valley since TSMC's selection of Arizona in 2020 as the site for its first U.S. factories.
The estimated 1,000 Taiwanese workers who moved here to work for TSMC have spawned new communities and businesses in the area.
Trump framed TSMC's plans as a matter of economic and national security.
"We must be able to build the chips we need right here in America and that's exactly what we're doing," Trump said.
TSMC CEO C.C. Wei said the Arizona plants would produce high-demand, cutting edge computer chips for artificial intelligence and smartphones.
Wei said 3,000 people were working in the company's first U.S. fab.
During the COVID pandemic, shortages of computer chips made in Asia had exposed the lack of U.S. chip-making factories.
Near the end of Trump's first term, in May 2020, the U.S. Commerce Department lured TSMC to the U.S. in order to expand chip-making capacity.
The CHIPS Act, enacted in 2022 under President Joe Biden, provided grants and loans to TSMC and Intel Corp., which has a manufacturing base in Chandler, to fast track fab construction.
TSMC was awarded up to $6.6 billion in grants and $5 billion in loans under the CHIPS Act. The company has said it received $1.5 billion in funding before the Biden Administration left office.
The company's chief financial officer told CNBC in January that the money would roll in gradually under Trump as the projects hit construction milestones.
TSMC is also eligible for a 25 percent tax credit to defray the multibillion-dollar cost of building or upgrading a semiconductor manufacturing plant.
The CHIPS Act tax credit expires Dec. 31, 2026. Construction must begin before that date to qualify for the credit.
Intel, with its chip manufacturing base in Chandler, was awarded $7.8 billion in direct funding under the CHIPS Act. The company has four fabs in Arizona, with two more under construction
"Without TSMC, making an iPhone would not be possible," said Hutcheson, a vice chairman at TechInsights who has tracked the semiconductor industry since the 1970s.
"Without TSMC, Nvidia's fastest AI chips in the whole world would not be possible. It's critical that they're making these chips in the United States."
As much as economics, geopolitics played a role in TSMC's expansion, Hutcheson said. China's designs on taking over Taiwan have raised concerns about conflict in the South China Sea.
"It won't take much to turn it into a hard conflict," Hutcheson said. "If that happens, it could really take TSMC out of the equation and stop their ability to produce. So it's very critical that TSMC expand globally, and America is not the only place they're expanding."
Trump's threat to slap tariffs on chips made in Asia also played a role in the U.S. expansion.
"That was a really big incentive," Hutcheson said.
"If you actually orchestrated the tariffs so that they were on the chips that were inside the iPhone you were buying, or inside the AI server you were buying... that would have really squeezed TSMC. It was an important threat "
Thompson offers a pessimistic forecast that the five Arizona fabs now in the pipeline will go online in two-year intervals in the next 10 years, starting in 2027 and ending in 2035.
www.12news.com
PHOENIX — Computer chip giant TSMC plans to invest $100 billion in Arizona semiconductor factories over the next four years, securing the state's place as a national leader in chip manufacturing.
RELATED: Multibillion-dollar Taiwan Semiconductor plant sparks North Peoria development boom
The expansion plan would ramp up TSMC's chip production well beyond its current plan for a vast tract of the Sonoran Desert in northwest Phoenix:
-Three new chip-making plants would be built, double the number under an existing $65 billion plan. The first TSMC plant in Phoenix started mass producing advanced chips earlier this year, five years after the world's largest chipmaker announced it would manufacture semiconductors in Arizona.
-TSMC would build two packaging plants -- the final assembly for computer chips -- and a research and development facility.
-The company projects 40,000 construction jobs over four years and "tens of thousands" of semiconductor related jobs.
Here's what you need to know about the expansion:
Super-Charging Development
TSMC was recruited by Arizona elected officials and economic developers for seven years before committing to building chip fabrication plans, or "fabs" in the state.The planned expansion could supercharge a multibillion-dollar housing and commercial development boom in the northwest Valley since TSMC's selection of Arizona in 2020 as the site for its first U.S. factories.
The estimated 1,000 Taiwanese workers who moved here to work for TSMC have spawned new communities and businesses in the area.
'Build the Chips Here'
President Donald Trump announced the expansion plan Monday at the White House, alongside the chief executive officer of Taiwan Semiconductor Manufacturing Co., the world's largest maker of computer chips.Trump framed TSMC's plans as a matter of economic and national security.
"We must be able to build the chips we need right here in America and that's exactly what we're doing," Trump said.
TSMC CEO C.C. Wei said the Arizona plants would produce high-demand, cutting edge computer chips for artificial intelligence and smartphones.
Wei said 3,000 people were working in the company's first U.S. fab.
Trump, Biden Ties to TSMC
Computer chips are essential components of consumer products, cell phones to cars, and military hardware.During the COVID pandemic, shortages of computer chips made in Asia had exposed the lack of U.S. chip-making factories.
Near the end of Trump's first term, in May 2020, the U.S. Commerce Department lured TSMC to the U.S. in order to expand chip-making capacity.
The CHIPS Act, enacted in 2022 under President Joe Biden, provided grants and loans to TSMC and Intel Corp., which has a manufacturing base in Chandler, to fast track fab construction.
TSMC was awarded up to $6.6 billion in grants and $5 billion in loans under the CHIPS Act. The company has said it received $1.5 billion in funding before the Biden Administration left office.
The company's chief financial officer told CNBC in January that the money would roll in gradually under Trump as the projects hit construction milestones.
TSMC is also eligible for a 25 percent tax credit to defray the multibillion-dollar cost of building or upgrading a semiconductor manufacturing plant.
The CHIPS Act tax credit expires Dec. 31, 2026. Construction must begin before that date to qualify for the credit.
Intel, with its chip manufacturing base in Chandler, was awarded $7.8 billion in direct funding under the CHIPS Act. The company has four fabs in Arizona, with two more under construction
Role of Tariffs, Geo-Politics
Tech industry analyst G. Dan Hutcheson explained TSMC's paramount place in the chip ecosystem."Without TSMC, making an iPhone would not be possible," said Hutcheson, a vice chairman at TechInsights who has tracked the semiconductor industry since the 1970s.
"Without TSMC, Nvidia's fastest AI chips in the whole world would not be possible. It's critical that they're making these chips in the United States."
As much as economics, geopolitics played a role in TSMC's expansion, Hutcheson said. China's designs on taking over Taiwan have raised concerns about conflict in the South China Sea.
"It won't take much to turn it into a hard conflict," Hutcheson said. "If that happens, it could really take TSMC out of the equation and stop their ability to produce. So it's very critical that TSMC expand globally, and America is not the only place they're expanding."
Trump's threat to slap tariffs on chips made in Asia also played a role in the U.S. expansion.
"That was a really big incentive," Hutcheson said.
"If you actually orchestrated the tariffs so that they were on the chips that were inside the iPhone you were buying, or inside the AI server you were buying... that would have really squeezed TSMC. It was an important threat "
Optimistic & Pessimistic Outlooks
Taiwan-based analyst Ben Thompson, who posts on the Substack "Stratechery," makes the optimistic and pessimistic cases for the TSMC announcement.Thompson offers a pessimistic forecast that the five Arizona fabs now in the pipeline will go online in two-year intervals in the next 10 years, starting in 2027 and ending in 2035.
Breaking down computer chip giant's $100 billion expansion in Arizona
TSMC expansion would secure state's spot as a national chips leader. Trump tariffs and geopolitics played a role, tech analyst says
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