TSMC Further Delays $40 Billion Arizona Chip Fab

Taiwan Semiconductor Manufacturing Co (TSMC), which makes most of the world’s cutting-edge semiconductors for firms including Apple and Nvidia, has indicated more delays to a chip fab being constructed in the US.

CNN reported that TSMC as saying that its second factory in Arizona will be delayed. The facility will now be operational in 2027 or 2028, compared to previous expectations of a 2026 start, according to Chairman Mark Liu.

“There will be a gap,” he reportedly told analysts on an earnings call Thursday. Liu is quoted by CNN as saying that construction on the shell of the factory had begun, but TSMC needed to review “how much incentives … the US government can provide.”

Arizona fabs

The company is in close contact with US officials on the matter, including discussion of tax credits, he reportedly added.

Most of TSMC’s manufacturing remains in Taiwan, but the company is currently building plants in Germany, Japan and the US state of Arizona in response to customers’ demands.

TSMC has older chip facilities in China and Washington state and back in 2020 announced that it would be building a $12bn chip-making plant in Arizona, construction of which began in 2021.

In December 2022 TSMC had announced that in addition to its first fab in Arizona, it had also started the construction of a second fab – scheduled to begin production of 4 or 3nm process technology in 2026.

TSMC has also previously said it would more than triple its investment to $40 billion in Arizona as it constructed the second chip factory – one of the largest foreign direct investments in the history of the United States.

When complete, TSMC Arizona’s two fabs will manufacture over 600,000 wafers per year, with estimated end-product value of more than $40 billion.

Second Arizona delay

Now TSMC has confirmed that its second facility will now only be operational in 2027 or 2028.

This is the second time it confirmed a delay, after it said during an earnings call in July 2023 that it will delay the start of chip production at the Arizona fab until 2025, due to a shortage of skilled labour.

The delay was a blow to US officials touting American efforts to develop domestic chip manufacturing, after President Biden had in December 2022 visited the TSMC construction site in Arizona.