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TSMC prepares for US-China chips decoupling · TechNode


On May 15, the world’s largest contract chipmaker announced plans to open a production plant, or “fab,” in Arizona, US. If you know the industry, it doesn’t seem to make business sense: the Taiwan Semiconductor Manufacturing Company (TSMC) will build a 5nm fab in Phoenix, Arizona and start churning out chips by 2024, with a target of processing 20,000 wafers per month. The chipmaker plans to invest $12 billion through 2029.

First, the Arizona fab will be small, and not at all leading-edge by TSMC’s standards. A 5nm fab will be mid-range, at best, in 2024. Right now, TSMC itself already produces Apple’s A14 processor on 5nm nodes for the upcoming iPhone 12. Qualcomm, AMD, and Nvidia are working closely with TSMC to ensure high volume production of their 5nm chips by 2021. If TSMC sticks to its plan, the company will start high volume production of 3nm chips in 2022. Also, 20,000 wafers per month is a tiny amount—“like dipping your toes in the water”—compared to the 2.5 million wafers per month TSMC currently processes.

Second, it will be expensive. In a recent investors’ call, TSMC itself said that between a fab in the US and one in Taiwan, “there is a cost gap, which is hard to accept at this point.” In a nutshell, the world’s largest contract chipmaker just announced that they will open a small, mid-level fab in the US for $12 billion. Why would they do that?

Opinion

Jan-Peter Kleinhans is director of the director of the project Geopolitics & Technology at Stiftung Neue Verantwortung, an independent, charitable, non-partisan tech policy think tank in Berlin.

Tune in to our Tech After Hours webinar discussion with the author, Jan-Peter Kleinhans, on “The Great Chip War: Can China achieve semiconductor independence?” tomorrow on May 28, 8pm (GMT+8). Space are limited so register now.

Because TSMC, maybe better than anybody else, knows that the semiconductor value chain is the football in the US-China competition over tech. And the contract chipmaker is right in the middle of this.

This value chain is highly efficient, but not at all resilient.

Even though their planned Arizona fab may not make a lot of sense economically speaking, it is an understandable long-term business decision to stay in the US government’s good graces. Especially since both the US Department of Commerce and the US Department of Defense have pushed TSMC for quite some time to open a fab in the United States.



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Written by Aakash Malu

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