TSMC $12 Billion Expansion Into Arizona To Bring 5nm Chips To Market And Create 16,000 New Jobs

in MOBILE TECH LIFE4 years ago

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TSMC $12 Billion Expansion Into Arizona To Bring 5nm Chips To Market And Create 16,000 New Jobs

Key Take Aways

  • Strategic investment gains favor with US regulators
  • Move could stave off competition from the mainland
  • Company seeks to mitigate risk during US - China trade disputes
  • US dominates in the manufacture of advanced foundty equipment

TSMC trying to build good relations with US regulators

Taiwan Semiconductor Manufacturing Company, Limited (TSMC), is the leading independent producer of silicon waffers used in the manufacture of microprocessors. Its most notable customers include Apple, Qualcomm, Intel, and Huawei. Construction is scheduled to begin in 2021 with operations beginning in 2024. It is reported that initial production will focus on 5 nano-meter System-on-a-Chip (SOC) processors. Future plans may also include the move to a 3nm architecture.

The US government sees the agreement as a means of securing national interests concerning the production of sensitive conponents and to guard against forced technology transfers, which is the case firms face while operating within China.

As far as the state of Arizona is concerned, 16,000 new jobs will be a welcomed boost to the local economy. Housing, schools, retail, and entertainment are among the beneficiaries of increased economic avćtivity. Local governments can also expect increased tax revenue.

Staving off the potential threat from SMIC

Semiconductor Manufacturing International Corporation (SMIC) is the largest domestic producer in china. Currently, the company is capable of producing chip no smaller the 14nm. The company faced lawsuits brought by TSMC for the theft if intellectual property and in 2005, entered a settlement of $175 million.

It would appear that the settlement was a small price to pay for IP that may be worth billions. And due to the risk of future IP theft, costly litigation, and nature of the Chinese legal system, TSMC's move to diversify its production outside of mainland China may be seen as a means to protect its market share and assets.

US dominates in semiconductor manufacturing equipment

US companies lead the top 10 integrated circuit (IC) equipment suppliers worldwide. The industry is worth over $50 billion and centers around precision equipment, services and support.

What is important to note is that if US-China trade relations should continue to erode to the point that the US government decides to place export restrictions on direct sales to China or those doing business with China, TSMC could find future business with China untennable.

Mitigating the risk of doing business in China

Apple is one of TSMC's biggest customers and in light of the current trade tensions between the US and China, the deal could secure Apple a production base closer to home as well as provide TSMC a means to attract additional customers.

The move comes at a time when many companies are beginning to formulate strategies in protecting their supply chains. With the US governments current efforts to reduce corporate taxes and eliminate overly burdensome regulations, companies may come to see the US as a safe bet for their investments.

Conclusion

In light of the current health situation affecting countries around the world and unresolved trade disagreements between the US and China, TSMC seting up shop in Arizona could be a sign that the semiconductor industry no longer sees China as the world's preferred factory.

Supporting references:

The Street.com

Sputniknews/Business

Techpowerup.com

Technologyreview.com

Semiengineering.com

Tomshardware.com