TSMC Invests Further in Arizona
Taiwan Semiconductor Manufacturing Corporation (TSMC) plans to make a $100B investment in the United States that involves building five additional chip facilities there in coming years.
TSMC said the expansion plans included three new chip fabrication plants, two advanced packaging facilities and a major research and development center. So, there it is IFTLE readers, TSMC committing to building advanced packaging capability in the US. We knew it made sense, we knew it had to happen sooner or later and now it looks like it finally will!
The proposed outlay of $100B to boost TSMC US production follows news last April that TSMC plans a third Arizona chip factory by 2030. Last year the company agreed to produce the world’s most advanced 2-nanometer technology at its second Arizona factory, expected to begin production in 2028. TSMC also agreed to use its most advanced chip making technology, called “A16”, in Arizona.
It should be noted that TSMC has also announced that it would not be producing its most advanced technologies in the US next year.
TSMC made the comment at its legislature, hours after the chipmaker announced that it would invest an additional US$100B to expand its manufacturing operations in the US. Asked by Taiwan People’s Party Legislator if TSMC would allow its most advanced technologies, the yet-to-be-released 2nm and 1.6nm processes, go to the US in the near term, Kuo said “no, I guarantee that the 2nm and 1.6nm processes will not go to the US next year.” TSMC needs government permission for any overseas joint ventures, but there are no restrictions on making the most advanced chips overseas other than for China.
TSMC did not give a timeframe for any of the proposed new investments.
North America is the biggest revenue source for TSMC, accounting for 75% of the chipmaker’s overall revenue last quarter, with Apple Inc, Nvidia Corp, Advanced Micro Devices Inc, Broadcom Inc and Qualcomm Inc among its major customers. Bringing more of its production to U.S. soil would solve a major supply chain risk for those firms.
TSMC could also play a central role in the future of rival Intel. As we discussed in IFTLE 622 US officials met with TSMC in New York this year about taking a majority stake in a joint venture in Intel’s factory unit. Intel has not responded to questions about such a meeting.
Taiwan’s cabinet said it would review the investment in line with its laws, which require government approval for any large overseas investment by a Taiwan company, but that it viewed overseas investments that would raise Taiwan’s overall competitiveness positively.
The Trump administration is in favor of onshoring more chip production but reportedly disagrees with the CHIPS Act. In a recent address to Congress, Trump said Congress should repeal the law and to use the money saved to reduce debt.
Trump argues that giving hefty tax credits to invest in the U.S. is a waste of money because his strategy of imposing tariffs on chips would have the same effect. He brought up TSMC’s recent pledge to spend $165 billion to build out facilities as evidence of that.
TSMC’s new US investment plan could help alleviate the immediate risk of tariffs on Taiwanese semiconductors.
Introduction of new Advanced Packaging Solutions
One of the questions IFTLE is continually asked is how long it takes a fabless IC company to introduce a new packaging solution to the market. I’ve come across an interesting article by McKinsey & Company consultants entitled “Advanced chip packaging: How manufacturers can play to win”.
Their conclusion is that to acquire and retain high-value fabless customers, manufacturers need to be comfortable codeveloping advanced-packaging solutions. While fabless players take full ownership of the chip-planning process before at-scale production begins, there is room for manufacturers to add value. Joint development often occurs during the chip-architecture design stage and initial shuttle runs for design validation (see figure). The need for such cooperation is expected to increase in the future because of the demand for higher-performance chips and the increased complexity of chip designs created by packaging.
Advanced packaging requires changes in the architecture of end-user software and hardware, so packaging design should be considered during the initial architecture stage, when support from back-end providers can lower the burden of adopting advanced packaging. Once a customer selects an advanced-packaging vendor, it will likely commit to that vendor for future projects as well.
For all the latest in Advanced Packaging stay linked to IFTLE………………………..
