Left Menu
Development News Edition

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

Reuters | Taipei | Updated: 15-05-2020 10:35 IST | Created: 15-05-2020 10:15 IST
Taiwan's TSMC to build Arizona chip plant as U.S.-China tech rivalry escalates
Representative Image Image Credit: Pixabay

Taiwan Semiconductor Manufacturing Co Ltd, the biggest contract chipmaker, said it plans to build a $12 billion factory in Arizona in an apparent win for the Trump administration's efforts to wrestle global tech supply chains back from China. The plan, which will be one of the biggest inbound U.S. investments on record and create over 1,600 jobs, comes as U.S. President Donald Trump steps up criticism of Chinese trade practices and Beijing's handling of the novel coronavirus ahead of the Nov. 3 U.S. presidential election.

Trump has long pledged to bring manufacturing back from overseas and now a steep economic slump brought on by the novel coronavirus is driving a government-wide push to end U.S. production and supply chain dependency on China. U.S. Secretary of Commerce Wilbur Ross touted the deal as "another indication that President Trump's policy agenda has led to a renaissance in American manufacturing."

TSMC is a major supplier to U.S. tech giants such as Apple Inc and Qualcomm Inc, as well as Chinese firms like Huawei Technologies, which Washington has put on a trade blacklist. "This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem that enables leading U.S. companies to fabricate their cutting-edge semiconductor products within the United States," TSMC said.

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

A U.S. Commerce Department official said TSMC's decision to locate the plant in the United States generated "goodwill" at the department, the drafter of a law that would if implemented, severely restrict TSMC chip sales to Huawei. Credit Suisse analysts said proposed restrictions could threaten TSMC's 14% of sales from Huawei, escalate U.S.-China tensions 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, exceeding Intel Corp's, rose more than 1.5% on Friday morning, outperforming a 0.8% gain in the main Taiwan stock market. "While it is hard to be certain, we believe that TSMC announcing a U.S. Fab could remove the threat of further Huawei restrictions in the very near-term at least," JP Morgan analysts said in a note.

ADVANCED CHIPS The plant, the biggest foreign investment by TSMC, will produce the most sophisticated 5-nanometer chips, which can be used in high-end defense and communications devices.

TSMC manufactures the bulk of its chips in Taiwan and has older chip facilities in China and Washington state. Its chips power Apple's iPhones and the iPhone maker works closely with TSMC to become the first to take advantage of new advances in its chip-making processes.

U.S. Secretary of State Mike Pompeo said chips from the new TSMC plant 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 caused concern among U.S. officials as a strategic rivalry with China deepens over the origins of the deadly coronavirus.

While Intel has major manufacturing operations in the United States, it supplies only its own chips rather than making them for outside customers. The Trump administration has been in talks with both Intel and TSMC to build a plant in the United States, and Intel said last week it was in discussions with the Department of Defense about improving domestic sources for microelectronics and related technology.

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

TSMC said that the construction of the Arizona facility would begin in 2021 with production targeted to begin in 2024 and that it would be able to process 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 latest details of TSMC's plans.


TRENDING

OPINION / BLOG / INTERVIEW

Why COVID-19 is unstoppable in USA despite it being ranked at the top of GHS Index?

Several worst-hit countries such as Italy, France, Spain, the UK, Canada, and Russia have peaked COVID-19 cases in April. Almost all of them have gradually flattened the curve. However, the USA is setting new daily records of infections tha...

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...

Videos

Latest News

US envoy issues rare public criticism of N Korean official

The top US official on North Korea accused a senior North Korean nuclear negotiator on Wednesday of being locked in an old way of thinking, days after the negotiator said Pyongyang wont resume talks with Washington because of its hostile po...

Ethiopia's week of unrest sees 239 dead, 3,500 arrested

At least 239 people have been killed and 3,500 arrested in more than a week of unrest in Ethiopia that poses the biggest challenge yet to its Nobel Peace Prize-winning prime minister. In the Oromia region, the toll includes 215 civilians al...

Pak aviation authority suspends licenses of 34 more PIA pilots

Pakistans aviation authority has suspended the licenses of 34 more pilots of Pakistan International Airlines on suspicion of holding fake degrees, according to media reports on Wednesday. Last week, the national flag carrier terminated the ...

Essel Propack sees 'exciting opportunities' in post-COVID-19 world

Packaging major Essel Propack sees exciting opportunities for growth as the world emerges from the coronavirus pandemic, with product and people safety driving a big surge in demand in areas like PPEs, sanitation, food and pharma, according...

Give Feedback