TSMC gets $6.6 billion in CHIPS funding for third Arizona fab

Microchip manufacturing giant TSMC will further expand its plans for a third fabrication plant in Arizona, thanks to a grant from the Biden Administration that will provide $6.6 billion in subsidies as part of the CHIPS and Science Act.

The funding was announced today with the signing of a preliminary agreement between the Taiwanese company and the US Department of Commerce. TSMC said that the third fab site will let it better serve the high demand for its most advanced semiconductor process technologies in the US.

“Our US operations allow us to better support our US customers, which include several of the world’s leading technology companies,” said TSMC chairman Mark Liu in a statement. “Our US operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

The three fabs, which will be situated near Phoenix, will each manufacture different types of chips, according to TSMC’s statement. The first, which is set to begin production in the first half of 2025, will produce chips using the company’s 4nm process technology. The second, slated to open in 2028, will produce 2nm and 3nm chips, while the third will cover 2nm and even more advanced chip designs.

TSMC’s US production has faced delays in getting up and running. The first Arizona foundry, which was announced in 2020, was set to open later this year and is now on track to begin production in the first half of 2025. The company announced in January that the second foundry, originally slated for a 2026 opening, would also be delayed. TSMC said today that it aims to have its third fab in operation by 2030.

The third fab had long been discussed, according to Gartner vice president analyst Bob Johnson, who added that TSMC is unlikely to even break ground on the project for another three or four years.

“They also talked about putting their 2nm process into their second Arizona fab to start production around 2028,” he said. “That will be about three years after they do it in Taiwan.”

Nevertheless, it’s a step in the right direction for a semiconductor supply chain troubled by political headwinds and market fluctuations. “Overall, I think it’s essential that major US customers of TSMC [which include Nvidia, Apple and AMD] have US fabs to fall back on if something happens to Taiwan,” Johnson said. (See also: Chipmakers report minimal disruptions from Taiwan earthquake)

TSMC said that the foundries, all told, will create about 6,000 high-tech jobs in Arizona. Studies from the Greater Phoenix Economic Council say more than 20,000 construction jobs will also be available as a result of its projects, TSMC said.