Left Menu
Development News Edition

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

Reuters | Washington DC | Updated: 15-05-2020 12:06 IST | Created: 15-05-2020 11:31 IST
Taiwan's TSMC to build Arizona chip plant as U.S.-China tech rivalry escalates
Representative Image Image Credit: ANI

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 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 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.

"The budget... suggests the eventual scale won't be big," Bernstein analysts said in a note, adding revenue contribution from the plant will stay at around 3%-4%. "The scale and technology are similar to what TSMC did in China, suggesting a balance between the US & China."

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.

"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. Shares of TSMC, the world's most valuable semiconductor company with a market capitalization of about $255 billion, exceeding Intel Corp's, closed up 1.7% on Friday, outperforming a 0.3% gain in the main Taiwan stock market.

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

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. ...

COVID-19: Weighing up the benefits and limitations of edtech platforms

Edtech companies shouldnt focus on merely pushing contents, but to provide an interactive, effective teaching and learning environment. ...

Shipping industry's COVID-19 resilience test could boost digitalization

The push towards digitalization in shipping industry was already happening and has been further accelerated by the pandemic as current practices are not tenable under present circumstances and would definitely not be in the future....

Health is pure science but why objectivity eludes WHO

We certainly need a global body to coordinate responses against health emergencies. However, this sheer need of humanity on this planet should not be milked by the World Organization WHO to overshadow constructive criticism and call for ref...

Videos

Latest News

Researchers reveal simpler way to generate sensory hearing cells

A team of researchers is revealing the secrets of a simpler way to generate the sensory cells of the inner ear. Their approach uses direct reprogramming to produce sensory cells known as hair cells, due to their hair-like protrusions that s...

50 people killed, many missing following Jade mine's collapse in Myanmar

At least 50 people died and many others are still missing after Jade mine in Hpakant township of Myanmars Kachin state collapsed on Thursday, Xinhua reported citing the local village administration officeCaused by the monsoon rains, the lan...

Pak army resorts to firing along LoC in two sectors in Poonch

Pakistani troops resorted to firing in various forward areas in twin sectors along the Line of Control LoC in Jammu and Kashmirs Poonch district on Thursday, prompting the Indian Army to give a befitting reply, officials saidAt around ...

Babri trial: Uma Bharti appears before CBI court

Senior BJP leader Uma Bharti Thursday appeared in person before a special CBI court here conducting trial in the 1992 Babri mosque demolition case.  The CBI court is currently recording the statements of 32 accused under CrPC section 3...

Give Feedback