TSMC’s Arizona Fabs to Prioritize Older Chips Over Latest-Gen Technology
Taiwan Semiconductor Manufacturing Company (TSMC), a leader in the chipmaking industry, has confirmed that its U.S.-based Arizona fabs will not produce the latest-generation chips, such as 2nm technology, before its Taiwanese facilities. This decision underscores Taiwan’s position as the primary hub for TSMC’s cutting-edge manufacturing capabilities.
Production Priorities and Plans
While TSMC initially planned to produce only 5nm chips at its Arizona facility, growing global demand led to an expansion of capabilities to include 4nm chips starting in early 2025. The facility is expected to later scale up to manufacture 3nm technology, with the second and third fabrication units still under construction. Despite these efforts, the more advanced 2nm chip production will remain exclusive to TSMC’s operations in Taiwan for the foreseeable future.
Challenges in the U.S.
TSMC’s Chairman and CEO, C.C. Wei, acknowledged significant hurdles in establishing and scaling production in the United States. He pointed out that building new facilities in the U.S. takes at least twice as long as in Taiwan due to stringent permitting processes and slower construction timelines. These delays have posed challenges for TSMC as it seeks to meet growing demand.
Promising Developments
Despite the slower pace, there is encouraging news. The Arizona fabs have reportedly achieved better yield rates—producing a higher percentage of usable chips—compared to similar facilities in Taiwan, outperforming them by around four percentage points.
The $65 billion investment into the Arizona operation has also created substantial economic benefits, including approximately 6,000 high-tech positions and over 20,000 construction jobs during its development.
Major Clients and Future Prospects
TSMC’s Arizona fabs are expected to cater to key clients like Apple and Nvidia, both of whom rely heavily on advanced chip technology. Apple has already begun sourcing chips from the facility for its iPhones, while Nvidia is anticipated to integrate the chips into its AI-driven applications.
While the Arizona fabs are an important step in diversifying TSMC’s global production footprint, Taiwan remains at the core of its innovation efforts. The strategic decision to prioritize 2nm chip production in Taiwan highlights the company’s reliance on its home base for leading-edge advancements.
TSMC’s expansion in the U.S. reflects a broader objective to decentralize chip production amidst intensifying global competition, all while maintaining Taiwan as the foundation for its technological breakthroughs.
