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REUTERS: Taiwan Semiconductor Manufacturing Co Ltd, the world’s largest contract chip maker, said it plans to build a $ 12 billion factory in Arizona in an apparent victory for the Trump administration’s efforts to fight global supply chains of technology from China.
The plan, which will be one of the largest incoming investments in the US. USA Registered and will create more than 1,600 jobs, it comes as United States President Donald Trump steps up criticism of Chinese business practices and Beijing’s handling of the new coronavirus ahead of the Nov. 3 presidential election. .
Trump has long pledged to return manufacturing from abroad and now a strong economic slump brought on by the new coronavirus is fueling a government-level push to end U.S. production and dependence on China’s supply chain.
United States Secretary of Commerce Wilbur Ross touted the deal as “another indication that President Trump’s political agenda has led to a renaissance in the American manufacturing industry.”
TSMC is a major supplier to American tech giants like Apple Inc and Qualcomm Inc, as well as Chinese companies like Huawei Technologies, which Washington has blacklisted commercially.
“This project is of critical and strategic importance to a vibrant and competitive US semiconductor ecosystem that enables leading US companies to manufacture their state-of-the-art semiconductor products within the United States,” said TSMC.
While it is huge in terms of foreign investment in the United States, the plan is small by TSMC standards. By 2020, TSMC’s capital spending plan is $ 15-16 billion.
The Taiwanese chipmaker said the plan was to build the plant for nine years.
A US Commerce Department official said TSMC’s decision to locate the plant in the United States generated “goodwill” in the department, the draftsman of a law that, if implemented, would severely restrict sales of TSMC chips. to Huawei.
Credit Suisse analysts said the proposed restrictions could threaten 14 percent of Huawei’s TSMC sales, increase tensions between the United States and China and delay the deployment of the next-generation 5G mobile network.
Shares of TSMC, the world’s most valuable semiconductor company with a market capitalization of $ 255 billion, outperforming Intel Corp, rose more than 1.5 percent on Friday morning, outperforming a 0.8 percent gain in the main stock market in Taiwan.
“While it is difficult to be sure, we believe that TSMC announcing a US Fab could remove the threat of new Huawei restrictions in the very near term at least,” analysts at JP Morgan said in a note.
ADVANCED CHIPS
The plant, TSMC’s largest foreign investment, will produce the most sophisticated 5-nanometer chips, which can be used in high-end communications and defense devices.
TSMC manufactures most of its chips in Taiwan and has older chip facilities in China and Washington state.
Its chips power Apple’s iPhones, and the iPhone maker works closely with TSMC to become the first to take advantage of new developments in its chip-making processes.
United States Secretary of State Mike Pompeo said the chips from the new TSMC plant will power everything from artificial intelligence to 5G base stations and F-35 fighter jets.
Semiconductors play a key role in both consumer electronics and defense equipment. The vast majority of the most advanced chips are made in Asia, which has caused concern among US officials as the strategic rivalry with China deepens over the origins of the deadly coronavirus.
While Intel has significant manufacturing operations in the United States, it only supplies its own chips rather than manufacturing them for external customers.
The Trump administration has been in talks with Intel and TSMC to build a plant in the United States, and Intel said last week that it was in talks with the Defense Department about improving national sources of microelectronics and related technology.
The TSMC announcement is not expected to derail the Pentagon’s efforts to bolster the microprocessor supply chain, despite the Commerce Department working on the deal with TSMC independently, a person familiar with the matter said.
Apple and Intel declined to comment.
TSMC said construction of the Arizona facility would begin in 2021 with production slated to begin in 2024, and that it could process up to 20,000 silicon wafers per month. Each wafer can hold thousands of individual chips. The investment will be made between 2021 and 2029.
The Wall Street Journal first reported the latest details of TSMC’s plans.
(Reporting by Stephen Nellis in San Francisco, and David Shepardson, Alexandra Alper, and Mike Stone in Washington, Karen Freifeld in New York; Yimou Lee in Taipei; Writing by Miyoung Kim; Editing by Leslie Adler, Muralikumar Anantharaman, and Stephen Coates)
