TSMC Arizona plant is expected to make around $10 billion in revenue every year

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Taiwanese chipmaker TSMC announced on Tuesday that it would more than treble its planned investment in its new Arizona plant to $40 billion, making it one of the largest foreign investments in US history, as President Joe Biden visited and lauded the project. The increased investment is a significant victory for Biden, who faced supply chain disruptions early in his presidency.

Biden’s recent trip to Asia convinced him that the United States is better positioned to lead the global economy in the next years “provided we keep our focus,” he said. When the two planned chip manufacturing sites open, Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co Ltd, or TSMC, estimates yearly revenue of $10 billion, with customers having annual sales of $40 billion from goods employing chips created there.

Apple Inc, Nvidia Corp, and Advanced Micro Devices Inc, all significant TSMC clients, have stated that their chips will be manufactured in the new facilities.

TSMC founder Morris Chang, chipmaker Micron Technology Inc CEO Sanjay Mehrotra, and Nvidia CEO Jensen Huang were among those who joined Biden at the facility’s opening ceremony. The factory, which is set to open in 2024, will produce a more advanced semiconductor than was previously announced.

Following the announcement, TSMC’s Taipei-listed shares were flat in early trade on Wednesday, matching the broader market. TSMC, the world’s largest contract chipmaker, is a major supplier to major hardware manufacturers in the United States. Its $40 billion investment in the two projects is the company’s largest outside of Taiwan.

TSMC
credit: reuters

The expansion of TSMC’s commitment in Arizona is the latest in a series of big investments made by chipmakers since the CHIPS and Science Act was passed this summer. International Business Machines Corp, Micron Technology Inc, and Wolfspeed Inc are among them.

TSMC announced plans to establish a second factory nearby to make “3 nanometer” chips, the most sophisticated currently in production, by 2026.

TSMC also stated that it intends to construct an industrial water reclamation plant. Chip production requires a lot of water, and Arizona, which is mostly desert, is experiencing water problems.

According to Liu, TSMC’s Phoenix plants are planned to produce 13,000 high-tech jobs, 4,500 of which will be employed by TSMC and the balance by suppliers. Biden has pushed to increase semiconductor output after the epidemic produced supply chain issues that resulted in chip shortages for autos and many other things.

According to a White House report on supply chain issues released last year, the United States accounts for only 12% of worldwide semiconductor production, down from 37% two decades ago.

Taiwan’s leading position as a manufacturer of chips used in technologies ranging from cellphones to automobiles to fighter jets has raised concerns about the island’s over-reliance, particularly as China increases military pressure to establish its sovereignty claims.

TSMC
credit: reuters

China claims Taiwan as its territory, while Taipei’s democratically elected government rejects Beijing’s claims of sovereignty. The $52.7 billion Chips and Science Act, which Biden signed into law in August, is intended to prevent a return of supply chain issues.

Biden’s victory in the 2020 presidential election in Arizona helped propel him to the White House. In 2016, Republican Donald Trump won the state. Biden has stated that he plans to run for re-election in 2024.

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