In a landmark development for American semiconductor manufacturing, TSMC Arizona has secured a $6.6 billion grant from the U.S. Department of Commerce. This milestone marks the nation’s efforts to revitalize its domestic chip production capabilities. The November 2024 announcement represents a crucial step in implementing the CHIPS and Science Act, demonstrating the federal government’s commitment to restoring America’s prominence in advanced semiconductor manufacturing.
The investment will support TSMC Arizona’s ambitious expansion plans, including constructing three state-of-the-art fabrication facilities in northern Phoenix. The company’s total investment in the region will reach an unprecedented $65 billion, making it the most significant foreign direct investment in a U.S. greenfield project. The funding package includes up to $5 billion in loans for the Taiwan-based semiconductor giant’s American subsidiary.
These facilities are projected to employ 6,000 people when operating at full capacity. The Greater Phoenix Economic Council’s economic analysis indicates that more than 20,000 construction jobs will be created throughout development. The first facility, which began volume production in Q4 2024, showcases the most advanced chipmaking technology available on American soil.
The significance of this development extends beyond job creation. TSMC Arizona’s facilities will be crucial in addressing the nation’s declining semiconductor manufacturing capacity. The United States, which once produced 40% of the world’s semiconductors, has seen its share drop to 10%. Each facility will serve distinct technological purposes, from smartphone chip production to advanced data center applications, supporting TSMC’s strong 2024 performance where advanced technologies (7nm and below) accounted for 74% of wafer revenue.
According to a transcript from TSMC’s Q4 earning call, the first facility entered high-volume production in Q4 2024, utilizing TSMC’s N4 process technology, focusing on smartphone chip production. The second plant, set to open in 2028, will employ N3 and N2 process technology to manufacture chips for AI-powered data centers, representing the industry’s most advanced semiconductor technology currently in production. The third facility, announced alongside the federal grant, will produce A16 chips and implement 2nm and more advanced future process technologies by 2030, enhancing performance and efficiency for high-performance computing applications.
Early performance indicators from TSMC Arizona’s first facility have been promising, with output and yields comparable to those of TSMC’s Taiwan facilities. This success has contributed to the company’s strong financial performance. In January, it reported a Q4 2024 14.3% revenue boost sequentially. The company also revealed plans for an industrial water reclamation facility targeting 90% recycling rates.
The project has garnered support from major technology players, including Apple and Nvidia.
TSMC chairman and CEO Dr. C.C. Wei emphasized the collaborative nature of the project, describing it as a testament to the grand alliance formed between TSMC, its customers, suppliers, and partners. The company has also demonstrated its commitment to sustainability through plans to construct an on-site industrial water reclamation plant, aiming to recycle 90% or more of its water usage.
Since its inception in August 2022, the CHIPS for America program has allocated more than $10 billion to partners across 20 states, with a total proposed funding exceeding $36 billion. These investments support critical areas such as research and development, science and technology, labor force development, immaculate energy, quantum computing, artificial intelligence, and nanotechnology.
This transformative investment in TSMC Arizona represents a crucial step in rebuilding America’s semiconductor manufacturing capabilities, ensuring the nation’s technological competitiveness and economic security for decades. As part of TSMC’s global expansion strategy, which includes new facilities in Japan and Germany, these Arizona plants will play a vital role in the company’s projected growth, with expectations for 2025 revenue to increase by about 20%.
Comments are closed.