TSMC considers investing more in the U.S. as EU talks waver

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Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s most advanced chip-maker, is weighing plans to invest billions of dollars more into cutting-edge chip factories in the U.S. state of Arizona than it had previously disclosed, but based on a Reuters report, the chipmaker is cool on prospects for an advanced European plant.

Amid a global chip shortage and new initiatives in the U.S. and Europe to subsidize semiconductor production, TSMC’s investment plans are being closely watched. TSMC announced last year that it would invest $10 billion to $12 billion to build a chip factory in Phoenix, Arizona, USA.

It was previously reported that the factory in Phoenix could be the first of up to six planned plants at the site. Now, TSMC officials are in the process of deciding whether the next plant should be a more advanced facility that can make chips with 3nm chip-making technology compared to the slower, less-efficient 5nm tech used for the first factory. The cost for a 3nm plant could be $23 billion to $25 billion.


According to Reuters’ sources, Officials have also sketched out plans for TSMC to make 2nm and smaller chips as the Phoenix campus is built out over the next 10 to 15 years, the person said.

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In building the plants, TSMC is likely to compete against America’s own Intel Corp. and South Korea’s Samsung Electronics Co. Ltd. for subsidies from the U.S. government. $50 billion in funding to support domestic chip manufacturing was announced by President Joe Biden, and the U.S. Senate could take action on that as early as this week.

U.S. Government and industry officials are of the opinion that a strong domestic chip-making sector is critical for the economy and national security. The U.S. subsidy plan does not exclude foreign firms, however, some government officials worry that subsidies for TSMC could help Taiwan.

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In Arizona, Intel has also committed to two more new fabrication plants, while Samsung is planning a $17 billion factory adjacent to an existing facility in Austin, Texas.

The European Union is also conducting its own debates on how to boost chip-making. Intel has shown serious interest in those efforts, with chief executive Pat Gelsinger pitching a subsidy that could amount to $9 billion for a proposed “Eurofab” during a trip to Brussels last month.

Thierry Breton, an EU industry commissioner, has championed the Eurofab idea. He spoke with TSMC’s Europe president, Maria Marced, last month. Although Breton publicly called the TSMC talk a “good exchange,” a second person familiar with the matter said the TSMC talks in Europe have gone “very poorly.”

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A TSMC spokeswoman did not rule out any possibilities but said that the company has no plans for a plant in Europe.

European chip and auto companies said they would prefer subsidies for the older generation chips that are heavily used by car manufacturers and are in short supply, and are mostly lined up against the idea of a TSMC plant in Europe.

Many of TSMC’s most lucrative customers are U.S.-based, such as Apple, while its European customer base is made up mostly of automakers buying less advanced chips. In the first quarter, clients based in Europe and the Middle East only accounted for 6% of TSMC’s revenue, far outpaced by 67% of sales from North America and 17% from the Asia Pacific.

TSMC has not ruled out building an older-generation chip plant in Europe to serve auto customers.


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