Taiwan iPhone Chip Maker Invests $40bn in U.S. Plants

Taiwan iPhone chip maker and international semiconductor manufacturing Co. TSMC announced a whopping $40 billion investment in U.S. plants.

The announcement came on Tuesday when President Joe Biden and the Taiwan-based firm’s boss opened the factory in Arizona promising to bring the world’s most advanced chip production technology to the country by 2026.

Mark Liu, TSMC’s chairman, said the firm would create two semiconductor fabrication plants with the first one expected to be online by 2024.

The overall investment approximated to $40 billion will therefore be the largest investment the company has made outside of Taiwan and the largest foreign investment in American history.

It therefore implies the chip giant will realize more than triple its investment in the U.S.— hence, a victory for Washington’s push to onshore vital parts of the semiconductor supply chain.

Apple Chief Executive Tim Cook, who was also present during the factory opening ceremony, said it was a significant moment.

“We look forward to expanding this work in the years to come as TSMC forms new and deeper roots in America,” he said.

TSMC investment to boost iPhone chip supply amid U.S. shortage

Generally, semiconductors are referred to as the “brains” of electronics like smartphones, car components, and AI technology.

Following a disruption in the supply chain of chips leading to shortages as a result of growing tensions between the US and China, the investment is noted as instrumental in boosting the supply.

In commenting on the current chip shortages during a speech in Phoenix on Tuesday, Biden said the US once made more than thirty percent of the world’s computer chips before the jobs moved overseas.

Biden said, “Today, we’re down to producing only around 10 percent of the world’s chips, despite leading the world in research and design in new chip technologies.”

“The United States is better positioned than any other nation to lead the world economy in the years ahead if we keep our focus,” he added.

Although the original deal for TSMC to build a plant in the US came in 2020, when President Donald Trump was in office, the latest announcement vastly increases the size of that investment.

Besides other semiconductors, TSMC Arizona plants will produce 3-nm and 4-nm chips, used for iPhone processors.

Taiwan chip maker investment, a game changer

During the Tuesday opening ceremony, apart from the Apple chairman, several other heads of technology companies relying on TSMC production, such as Nvidia and Advanced Micro Devices, were in attendance.

According to analysts, TSMC’s investment is observed as a potential game changer in the high-tech industry.

Wedbush analyst Dan Ives said, “The TSMC investment is a significant step for US chip investment over the next decade.”

Ives added, “This kicks off a legitimate battle between the US and China on chip production with this being a monumental strategic move by TSMC.”

In August, Biden signed a law committing $280 billion (£232 billion) to high-tech manufacturing and scientific research amid fears that the US was losing its technological edge to China.

Although the investments include tax breaks for companies that build computer chip manufacturing plants in the US, the move came at a time when relations between the two countries have soured.

Therefore, Washington accelerated its push to diversify chip production due to the rising political tensions between China and Taiwan, the self-ruled democratic island where TSMC is based and which Beijing views as part of its territory.

U.S chip plants expansion to increase workforce and output

According to the company, in line with the expansion, TSMC will increase its workforce in Arizona to 4,500 from an initial plan of 1,600.

TSMC’s first plant alone, slated to begin production in 2024, will produce 4-nm chips, used for iPhone 14 Pro processors.

Therefore, once that plant and the 3-nm facility are operating at full capacity, TSMC’s total output in Arizona will be sixty thousand wafers per month, triple its original plan of twenty thousand.

In a statement, Liu said, “When complete, TSMC Arizona will be the greenest semiconductor manufacturing facility in the United States producing the most advanced semiconductor process technology in the country, enabling next generation high-performance and low-power computing products for years to come.”

“We are thankful for the continual collaboration that has brought us here and are pleased to work with our partners in the United States to serve as a base for semiconductor innovation,” he added.

Besides additional TSMC investment plans, Samsung is building a seventeen billion dollar plant in Texas, while top U.S. chipmaker Intel is spending at least forty billion dollars to build chip plants in Arizona and Ohio.