If Taiwan Semiconductor Manufacturing Co (TSMC) increases its investment in Arizona, it would likely operate dual production hubs in Taiwan and the US, with US capacity nearly sufficient to meet that country’s local demand, an economist said yesterday.
Liu Pei-chen (劉佩真), a researcher at the Taiwan Institute of Economic Research, was responding to a New York Times report which said TSMC could build more chip facilities in Arizona as part of a tariff deal with the US.
TSMC would commit to building more factories in the US in exchange for a reduction in the standard duty on imported goods from Taiwan to 15 percent from 20 percent, the report said.
Photo: Bloomberg
The chipmaker could build new advanced wafer fabs as well as IC packaging and testing facilities as part of the arrangement, Liu said.
The number of TSMC fabs in Arizona would likely rise to six to eight, with total monthly production capacity of at least 150,000 wafers, which would come close to meeting the demand for high-performance computing and artificial intelligence chips in the US, she said.
That would be considered a gamble for Taiwan, given that many in the country believe TSMC offers the country a “silicon shield,” as some countries such as the US need TSMC’s advanced chips.
Should those chips all be made and packaged in the US, Washington might be less likely to support Taiwan in deterring a potential attack by China.
TSMC could build more advanced IC assembly plants to provide advanced 3D chip-on-wafer-on-substrate and system-on-integrated-chips IC packaging services to its clients, establishing the US as a complete semiconductor hub, Liu said.
A one-stop comprehensive production model in which TSMC rolls out chips and provides assembly services would meet demand from its US clients such as Nvidia and Advanced Micro Devices (AMD) to lower their risks at a time of geopolitical unease, she said.
“If TSMC builds new wafer fabs in Arizona, a dual-hub production model will take shape, gradually moving away from the current model of a single hub in Taiwan,” Liu said.
However, costs could become an issue for such a model, she said.
TSMC faces extremely high depreciation costs due to the high expense of building production capacity in the US, and it would also have to adjust the utilization rates of its fabs in Taiwan, which could affect the company’s bottom line, she added.
TSMC is investing US$65 billion to build three advanced wafer fabs in Arizona. The first fab started mass production in the fourth quarter of 2024.
The structure for the second fab was completed last year, with volume production targeted for 2028.
Ground was broken on a third fab in April last year.
In March last year, TSMC pledged to invest an additional US$100 billion to build three more fabs, two IC assembly plants and a research-and-development center.
The government did not comment on the New York Times report, while TSMC has been quiet before its latest investor conference tomorrow.
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