TSMC Announces Expansion Plans for Highly-anticipated Arizona Fab

December 14, 2022 by Biljana Ognenova

TSMC will be adding a second fab to its Phoenix, Arizona, site—with plans to make both 4 nm and 3 nm process chips within the next three years.

On Dec. 6, TSMC announced plans to build a second chip fab at its Phoenix, Arizona, site, building on its initial plans to rectify a $12 billion fab. After receiving $40 billion in federal funding for the two fabs, the company announced that the first fab will begin manufacturing 4 nm process chips (an improvement from the originally-stated 5 nm) in 2024, while the second one will start making 3 nm chips by 2026.


TSMC's first fab in Phoenix, Arizona

TSMC's first fab in Phoenix, Arizona. Image courtesy of The Verge


3 nm chips are the latest state-of-the-art chips available on the semiconductor market today. Reportedly, TSMC may even branch into 1 nm chips as production progresses, but this added scaling would be a costly endeavor.


Promises of the CHIPS+ Act Come to Fruition

The CHIPS and Science Act earmarked $52 billion to bolster U.S. manufacturing, supply chains, and national security. From this funding, local and international chipmakers receive grant money and tax incentives to fortify the U.S.' position in the semiconductor industry. Money disbursement set to begin in 2023 will be available to foreign chipmakers as long as they support domestic manufacturing by building fabs on U.S. soil.


TSMC's 3-2 FIN configuration 

An illustration of TSMC's 3-2 FIN configuration for 3 nm and 2 nm chips. Image courtesy of TSMC

TSMC anticipates that the two Arizona factories will produce an estimated 600,000 wafers annually. Construction of the first fab has already generated 10,000 jobs and will create another 10,000 engineering jobs, out of which 4,500 will attract high-tech talent for direct fab employment. 


TSMC Garners Support at Opening Ceremony

TSMC's opening ceremony for the first new fab welcomed U.S. government officials from the highest ranks, including President Biden, who commented, "American manufacturing is back." TSMC founder Dr. Morris Chang, TSMC chairman Mark Liu, and over 200 beneficiaries of the increased chip capacity also attended. These guests included Apple CEO Tim Cook, Micron CEO Sanjay Mehrotra, AMD chair and CEO Dr. Lisa Su, and NVIDIA president and CEO Jensen Huang. 


Guests at the ceremonial opening of the TSMC Phoenix fab

Guests at the opening ceremony of the TSMC Phoenix fab. Image courtesy of Adriana Zehbrauska/The New York Times


Other companies benefiting from TSMC's expansion plans include AWS, Qualcomm Technologies, Broadcom, Marvell, NXP Semiconductors, and Microsoft. Trade associations like SIA, SEMI, and the Global Semiconductor Alliance have supported the expansion plans, too. Arizona State University is on board as an educational backup partner. TSMC also announced plans to use advanced semiconductor manufacturing tools from long-time suppliers Applied Materials, ASM, ASML, Lam Research, KLA, and Tokyo Electron.  


TSMC's Fab Goals Factor in the Environment

TSMC has had plans to expand in the U.S. since 1987. However, the then-planned WaferTech fab near Portland, Oregon, failed to deliver on its promise due to difficulties with staff and costs. Now, 25 years later, thanks to more chip demand and government subsidies, TSMC will finally begin advanced semiconductor production in the silicon desert.

Water management has been a burning issue in Arizona, and TSMC's chips at the new fab will be thirsty for water. Because water with traces of minerals and bacteria affects chip performance, chip manufacturers use ultra-pure water (UPW) to cleanse wafers from impurities. When the used water is disposed of, it can have a harmful environmental impact. TSMC has committed to going green in Phoenix by building an Industrial Water Reclamation Plant for near-zero liquid discharge.

According to the Wall Street Journal, the Arizona fabs will account for only one percent of TSMC's capacity, with future estimations coming close to three percent. Taiwanese officials have denied claims that TSMC is emigrating from the island, stating that the backbone of the company's supply chain and R&D remains local.