TSMC set to expand US semiconductor factory in Arizona, plans to build second facility by 2026

President Joe Biden flies to Arizona on Tuesday to celebrate the gigantic expansion of a Taiwanese semiconductor factory, citing the project as proof that the United States is finally breaking the dangerous dependence on manufacturers strangers for the vital component.

The White House has announced that TSMC is unveiling plans to build a second facility in Phoenix by 2026, increasing its investment from $12 billion (about Rs. 98,800 crore) to $40 billion (about Rs. 3, 29,400 crore).

The ‘major milestone’ represents ‘the largest foreign direct investment in Arizona’s history and is one of the largest in United States history,’ the council’s director told reporters. White House national economist, Brian Deese.

Biden will speak at the TSMC site, joined by high-profile political figures and corporate titans, including Apple CEO Tim Cook, TSMC founder Morris Chang and Micron CEO Sanjay Mehrotra.

The Democrat will seek to take credit for the influx of investment, pointing to the effect of his signing the CHIPS Act, which earmarks nearly $53 billion for semiconductor grants and research. It’s a message he will be particularly keen to spread in Arizona, which has long been a Republican-dominated state but has turned into a battleground where Democrats are increasingly successful.

The factory expansion — which comes on top of other major microchip manufacturing projects dotted around the country — is part of an overall strategy by the Biden administration to try to end the reliance on microchip. towards foreign suppliers.

Although much of this supply comes from reliable American allies, especially Taiwan, the shutdown of the Covid pandemic has demonstrated how fragile these supply lines are in an emergency. As China threatens to take over Taiwan — and grapples with how to secure its own semiconductor supplies — Washington wants to bring vital gadgets home.

“Virtually every big tech company, including auto companies and every company that uses technology, is worried that something is going to happen between Taiwan and China. And so there’s a massive rush to move manufacturing out of both country,” said technology analyst Rob Enderle.

The smaller the better

In the high-stakes world of microchips, quantity matters. Tiny, hard-to-make gadgets are at the heart of nearly every modern modern device, vehicle, and weapon.

But quality – and small size – are also increasingly important for sophisticated everyday devices like smartphones and there the White House says it has good news.

The new TSMC factory will produce tiny 3 nanometer chips, while the existing facility will begin to downsize its current 5 nanometer chips to 4 nanometers.

Building a factory, or a “fab”, takes several years. But once “at scale, these two fabs could meet all of America’s demand for advanced chips when they’re completed. That’s the definition of supply chain resilience,” he told reporters. Ronnie Chatterji, Deputy Director of the National Economic Council for Industrial Policy.

Deese, one of Biden’s most senior advisers, said the larger message from the White House is that US industrial strategy is being reborn.

For nearly four decades, the idea was “repartition”, where the government would “step aside” and cut taxes on big business to attract investment, he said.

Instead, Biden’s policy — both through the CHIPS Act and the giant Cut Inflation Act — uses public money to lure or “attract” private investment.

The goal is not to exclude “private enterprise, but in fact to encourage private investment on a historic scale,” Deese said.

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