Former President Donald J. Trump and now Biden administration officials have pushed for measures to encourage both foreign and domestic chipmakers to build more factories in the United States. Democrats and Republicans, influenced by a recent shortage of chips, voted in July to a $52 billion grant package in the CHIPS and Science Act for the increased cost of building such plants.
Chipmakers have responded with announcements of major factory projects, including from Intel in Ohio, Micron Technology in New York and Samsung Electronics in Texas. But the most coveted manufacturer today is TSMC, whose founder, Morris Chang, in 1987 pioneered the concept of manufacturing chips for other companies that design them.
TSMC is by far the largest “foundry” in the world, as the industry calls such services, and has recently boasted the most advanced manufacturing technology. Besides Apple, the big customers are Amazon, Qualcomm, Nvidia and Advanced Micro Devices.
Those companies have not publicly expressed concerns about the concentration of chip production in Taiwan, which faces earthquake and drought risks in addition to China’s claims. But the presence of senior executives from several companies at Tuesday’s event suggests strong support for having more key components for their products manufactured close to home.
The expansion plan in Phoenix shows that customer pressure is having more impact on TSMC, which had long argued that concentrating production in giant “gigafabs” in Taiwan was most efficient, analysts and industry executives said.
TSMC relaxed that stance somewhat in 2020 by agreeing to open the Phoenix plant. But the company put a limit on the factory’s level of manufacturing technology, which is judged by measuring how small a company can make key parts from individual transistors on a chip. The smaller those dimensions — measured in nanometers or billionths of a meter — the more transistors can be packed onto a piece of silicon.
Originally, the company set the technology level at the Phoenix site at five nanometers. That was an improvement over most chips in 2020, but behind the level TSMC would produce in Taiwan in 2024, when the US factory opens. The new plan would upgrade the factory to also use four-nanometer technology, which Apple is adopting first. The second plant, which is expected to be commissioned in 2026, will be able to produce three-nanometer chips, TSMC said.
