TSMC, the world’s largest microchip maker, announced that it will build another megafactory in Arizona, with a total investment of $40 billion, up from $12 billion as originally planned. The US provides important subsidies in the industry, and for TSMC it is also a matter of business and geopolitics.

TSMC is benefiting from generous subsidies offered by the Americans, and in addition to the $12 billion plant it has begun building in Arizona, it has announced another processor superfactory with a total investment of $40 billion, a threefold increase. than was announced in May 2020.

President Biden will also visit the Arizona site on Tuesday and Apple CEO Tim Cook will also attend the event.

The first factory that will create microchips using 5-nanometer technology will start production in 2024. The second plant will start construction in 2023 and will produce from 2026, making more advanced chips using 3-nanometer technology.

The U.S. has launched a $52 billion plan, the Chip and Science Act, to provide subsidies to companies willing to open processor manufacturing facilities in the U.S., the idea is to counter China’s investment in the field.

The most advanced processors are made by only a few companies, with TSMC being the largest, accounting for more than 90% of global production in some segments. Creating processors requires a huge investment, and only a few companies in the world can afford them.

TSMC will continue to make its state-of-the-art chips in Taiwan, but with rumors of a possible Chinese invasion, TSMC needs to diversify its production outside of Taiwan sooner.

The “N minus 1” principle makes the microchips produced in Taiwan by TSMC one generation better than those produced by the company in other countries of the world.

Even with the two new plants in the US, TSMC’s share of chips made outside of Taiwan will remain low, well below 10-15%.

Sources: Financial Times, WSJ, CNN

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