TSMC to triple US chip investment

Taiwan Semiconductor Manufacturing Company (TSMC) is to more than triple its investment in the United States to US$40 billion to bring the world's most advanced chip production technology to the country by 2026.

TSMC, the world's biggest contract chipmaker, announced to increase its investment in Arizona, where it is building a US$12 billion chip facility, to US$40 billion in order to build a second, even more advanced plant there.

The announcement came ahead of an equipment installation ceremony at the first facility attended by US President Joe Biden and numerous tech industry executives.

The additional facility will begin operation by 2026 and will be the first plant in the US to make 3-nanometer chips, the most advanced currently available, a White House official said.

In line with the expansion, TSMC will increase its workforce in Arizona to 4,500, from an initial plan of 1,600, the company said.

Nanometer size refers to the distance between transistors on a chip - the smaller the number, generally speaking, the more powerful the chip. As the brains of electronic devices, such chips are vital for everything from smartphones and autonomous vehicles to supercomputers and AI technologies.

TSMC's first plant, which is slated to begin production in 2024, will produce 4-nm chips of the kind used for iPhone 14 Pro processors. Once that plant and the 3-nm facility are operating at full capacity, TSMC's total output in Arizona will be 60,000 wafers per month, triple its original plan of 20,000.

"When complete, TSMC Arizona will be the greenest semiconductor manufacturing facility in the United States producing the most advanced semiconductor process technology in the country, enabling next generation high-performance and low-power computing products for years to come," TSMC Chairman Mark Liu said in a statement.

"We are thankful for the continual collaboration that has brought us here and are pleased to work with our partners in the United States to serve as a base for semiconductor innovation."

Apple and chipmakers AMD and Nvidia will be among the first customers buying chips from TSMC's Arizona plant, according to an announcement by the company and the White House, confirming an earlier Nikkei Asia report.

AMD told Nikkei Asia that it looks forward to having its most advanced chip products built in TSMC's Arizona fabs.

Nvidia's CEO Jensen Huang said in a statement that bringing TSMC's investment to the United States is a masterstroke and a game-changing development for the industry.

Biden's decision to attend the equipment installation ceremony underscores the importance of TSMC to Washington's chip ambitions.

Speaking at the event, Biden said America had once had more than 30% of global chip production.

"Then something happened. American manufacturing, the backbone of our economy, began to get hollowed out. Companies moved jobs overseas," he said.

"Today we're down to producing only around 10% of the world's chips, despite leading the world in research and design in new chip technologies. But ... where is it written that America can't lead the world once again in manufacturing? I don't know where that's written, and we're proving it can."

Biden was joined by a who's who of the tech industry, including CEOs from companies such as Apple, Nvidia and AMD as well as top chip making tool companies Applied Materials and Lam Research plus other chip-related players such as Entegris, Synopsys and Arm.

TSMC founder Morris Chang, Chairman Mark Liu and CEO C.C. Wei all attended.

Liu said in his remarks that the plant has the potential to generate US$10 billion in revenue a year and chips produced there could help build advanced electronics products worth US$40 billion a year.

The companies represented at the ceremony are worth at least US$4 trillion, making the event the most important gathering in the semiconductor industry in the post-pandemic era.

In the chip industry, a tool move-in event signals that the installation of essential equipment has begun and is a significant milestone for a chip making facility to become operational.

TSMC's announcement comes as Washington is pushing hard to onshore vital production of semiconductors. In addition to their economic importance, chips are also seen as vital to national security - a sentiment reflected in the latest round of export controls Washington imposed on China in an attempt to curb its semiconductor advancement.

Their importance was further brought home by a global chip shortage sparked by the pandemic and supply chain disruptions, hitting a range of industries.

Rising political tensions between China and Taiwan, the self-ruled democratic island where TSMC is based and which Beijing views as part of its territory, have further accelerated Washington's push to diversify chip production.

Most of the world's cutting-edge chips are built in Asia by TSMC and Samsung Electronics of South Korea.

The US is hoping to change this by offering incentives for companies to build chip capacity on American soil. In July, lawmakers passed the US$52.7 billion CHIPS and Science Act package to boost the domestic semiconductor industry.

In addition to TSMC's expanded investment plans, Samsung is building a US$17 billion plant in Texas, while top US chipmaker Intel is spending at least $40 billion to build chip plants in Arizona and Ohio.

Only TSMC, Samsung and Intel are building or attempting to build chips as advanced as 3-nm, and all aim to put even more advanced 2-nm chips into production by 2025.

 

Tata to produce chip in India

India's Tata Group will begin producing semiconductors in the country within a few years, a move that the chairman of the group's main company said will make the South Asian country a key part of global chip supply chains.

In an interview with Nikkei Asia in Tokyo on Thursday, Tata Sons Chairman Natarajan Chandrasekaran revealed that the conglomerate plans to launch new businesses in emerging fields such as electric vehicles.

"We have created Tata Electronics, under which we are going to set up semiconductor assembly testing business," Chandrasekaran said, referring to an electronic components manufacturer that the group founded in 2020.

"We will have discussions with multiple players," the chairman added, raising the possibility of partnerships with existing chip manufacturers. It is believed to be highly difficult for an inexperienced company to launch a chip making business on its own.

It is thought that semiconductor manufacturers and foundries in the US, Japan, Taiwan and South Korea are potential partners in the project.

Chandrasekaran also said, “Tata will look into the possibility of eventually launching an upstream chip fabrication platform." The upstream semiconductor manufacturing process plant called wafer fabrication plant, or fab, is more challenging both technologically and financially compared with downstream process of assembly and testing. His comments reflect the group's aspiration to enter the market if it is technologically and financially feasible.

Tata's move into chip making will break new ground for India, which has virtually no semiconductor industry, other than software-based design, although demand for semiconductor-intensive products such as smartphones and EVs is growing rapidly.

There is also growing momentum to diversify chip supply chains, which are at present concentrated in East and Southeast Asia, following the global chip shortage and US-China tensions. The ongoing US-China decoupling in chip-related technology is also leading major chipmakers to seek more diversified supply-chain locations, which may well open an opportunity for India to emerge as a frontier location. Tata seems to have decided that this is an opportune time to enter the market.

Chandrasekaran explained that his group has been promoting its future ready strategy, in which existing group companies, from steel to arms, adapt to new challenges, such as digitization and climate change, while also launching new businesses.

As part of that effort, the chairman revealed that the group as a whole plans to invest US$90 billion over the next five years. In addition to semiconductors, the chairman said the company is in the process of starting up new businesses such as the manufacture of EVs and EV batteries, production of renewable energy and development of super apps that allow users to buy goods and services from groceries to financial products.

He also said the group wants to unify the management of Air India, the national flagship airline that it has bought back from the government, and Vistara and AirAsia India, which are also in the group. However, he did not say whether this meant combining their brands, simply stating that it was an issue "up for discussion going forward."