A newly accomplished 3.5 million-square-foot constructing on 1,100 acres within the Arizona desert north of Phoenix encompasses a giant logo made from a microchip wafer and the letters TSMC.
Taiwan Semiconductor Manufacturing Company The first chip factory, or fab, in Arizona is making history since it is essentially the most advanced chip factory on U.S. soil Apple has committed to being the owner of the web site biggest customer.
CNBC first visited the factory in 2021, not long after TSMC broke ground. The company initially announced the ability would cost $12 billion and produce 5-nanometer chips by the top of 2024. Three years later, the worth has risen to $20 billion and full production is delayed until 2025.
Instead, the factory is in pilot production, producing sample wafers and sending them to customers for review. TSMC has committed to constructing two more factories on the positioning by the top of the last decade, representing a complete investment of $65 billion.
The project is “damn behind the original schedule,” TSMC Arizona Chairman Rick Cassidy told CNBC during an exclusive first take a look at the finished factory in November.
“When we came to the United States, we knew we would go through a learning process,” Cassidy said. “Be it the permits, learning to work with the tradespeople, learning to work with the unions, the local labor laws. There were many realizations moving forward. Now we have overcome this.”
With the assistance of around 2,000 employees, the factory will produce more advanced chips than originally planned. According to TSMC, 4-nanometer chips are manufactured at a rate of 20,000 wafers per 30 days.
According to a, wafers cost greater than $18,000 Morgan Stanley report. The price continued to rise and TSMC took over Share value with it in the previous couple of years.
“We have seen that TSMC is able to name its price and everyone will pay it because right now reliability and quality are in demand,” said Daniel Newman, CEO of Futurum Group.
“On an equal footing with our Taiwanese compatriots”
The factory's yields are expected to be “right at the level of our Taiwanese compatriots,” Cassidy said. Still, about 92% of the world's most advanced chips are currently made in TSMC's Taiwanese factories, making the US removed from independent.
“It is difficult or impossible for the United States or any other country to be completely self-sufficient in everything they need to build semiconductors,” said Stacy Rasgon of Bernstein Research. “It’s a pipe dream.”
Although the U.S. was the birthplace of microchips within the Fifties and stays a number one center for chip design, they’re producing today only 10% of the world's chips and none of essentially the most advanced. As supply chain chaos collided with booming demand for consumer electronics in the course of the pandemic, the resulting chip shortage exposed the grave risks of counting on outsiders for such critical technology.
In the event of aggression between China and Taiwan, an earthquake or other event affecting Taiwan for a time period, “the entire market, the entire world could suffer from the lack of availability of leading nodes,” Newman said.
A deadly magnitude 7.4 earthquake In April there was a transient production stop in Taiwan and one Loss of $92 million for TSMC. Arizona buildings are “well prepared for earthquakes,” Cassidy said.
Further concerns surfaced when President-elect Donald Trump expressed opposition to the $52 billion CHIPS Act during his campaign in October. Weeks later, the US Department of Commerce finally determined that TSMC had appropriated $6.6 billion from the bipartisan bill.
“Repealing the CHIPS Act would impact the security of Americans,” Commerce Secretary Gina Raimondo said in an interview with CNBC, adding that she didn’t imagine the brand new administration would repeal it.
“I just don’t think they’re going to do that,” Raimondo said.
Talks with TSMC about moving advanced chip production to the US began in 2018, during Trump's first term.
“I organized a phone call between the chairman of TSMC and the head of Apple,” said Wilbur Ross, who was then commerce secretary. “Apple has been very supportive of the idea of TSMC coming.”
Rose Castanares, a 26-year company veteran and current president of TSMC Arizona, was also involved within the initial discussions. Customers “wanted stable supply,” Castanares said.
Reliance on chips from Asia has also complicated the U.S. quest for technological dominance. That's why President Joe Biden has attacked the chip industry with a fancy web of export controls designed to stop China from moving forward with advanced technology.
In October there have been some TSMC chips discovered in Huawei devicesdespite sales bans to the Chinese company.
“This problem is as old as time,” Newman said. “There are many complex diversions of goods to move the gray market to different countries that have limited access to the most modern or advanced technology.”
Workers, water and electricity
Nearby, in Chandler, Arizona, Intel also builds two huge factories.
The US company has a totally different business model and develops and manufactures its own chips, while TSMC only makes chips for others. The relationship between the 2 firms is solid, Cassidy said.
“We'll meet up [Intel] weekly and the feedback is that we are helping them improve their ranks,” Cassidy said. “We help them train the most advanced things, so I think they're pretty happy with what we're doing.”
Both firms have delayed the schedules for full production at their latest factories in Arizona. But while TSMC stays the undisputed leader in advanced chips, Intel continues to stumble.
The two may even compete for a scarce resource within the U.S. chip industry: labor.
“When we completed construction of this factory, it was truly the first advanced manufacturing factory built in the United States in at least a decade. Semiconductors are a very, very sophisticated technology,” said TSMC’s Castanares. “That experience simply doesn’t exist here in the United States.”
At the beginning of the project, TSMC sent around 600 engineers to Taiwan for training. Process integration engineer Jeff Patz spent 18 months there as of 2021.
“The purpose was to actually make things, right? And learning how they are made,” Patz said. “You have to have a kitchen to cook.”
TSMC also brought experts from Taiwan for three-year temporary assignments. The company plans to rent no less than 6,000 employees by the point all three factories are accomplished.
“We are actively recruiting engineers from universities in Arizona and across the U.S.,” Castanares said. Arizona State University “even has something called a TSMC day.”
Water is one other scarce resource that is required in abundance.
As Taiwan recently faced its worst drought of the yr almost a centuryTSMC is not any stranger to recycling the large amounts of water needed to make chips. TSMC will need 4.7 million gallons of water per day to run its first factory in Arizona, but it should reduce that have to 1 million gallons per day, including by recycling about 65% of it, the corporate said.
The production of chips also requires an infinite amount of energy.
TSMC has built solar arrays on site, but that's not nearly enough to cover the two.85 gigawatt-hours per day needed to run its first factory. This corresponds to the electricity consumption of approx 100,000 US households. TSMC said it’s purchasing renewable energy credits to offset this. But amid the information center boom fueled by artificial intelligence, Arizona's largest utility warned it may very well be possible the transmission capability is exhausted before the top of the last decade.
At this point, TSMC also plans to start production at its third factory in Arizona, which Cassidy said will “probably be 2 nanometers and more advanced.”
TSMC can be expanding its global footprint. The company opened its first factory in Japan in February and broke ground on an $11 billion factory in Germany in August.
Within the U.S., TSMC will likely proceed to expand within the U.S., Cassidy said.
“There’s room for a lot of Fabs,” Cassidy said.
Watch the total video to see never-before-seen footage inside TSMC's Arizona factory: https://cnbc.com/video/2024/12/12/inside-tsmcs-new-chip-fab- where-apple-will-make-chips-in-the-us
image credit : www.cnbc.com