TSMC Rumored to Increase Capacity of Arizona Fab

When Taiwan Semiconductor Manufacturing Co. outlined plans to build a fab in the U.S., it set a rather modest production capacity goal of around 20,000 wafer starts per month (WSPM). Nowadays chipmakers tend to build larger fabs in a bid to minimize their costs per wafer. But according to a new unconfirmed report via UDN, the company might be planning several phases of expansions for its Arizona plant.

UDN this week reported on internal rumors that TSMC intends to build not one, but "six fabs in the Arizona plant area" in a bid to expand the site to the so-called 'MegaFab-class' facility. TSMC naturally does not comment on unannounced plans. Furthermore, it is uncommon for chip producers to share strategic plans outside of top management. This does not mean that the report is completely baseless.

Based on TSMC's classification, a MegaFab has capacity of around 25,000 WSPM, so its planned facility in Arizona can already be called a MegaFab, which is why its expansion to this production capacity is not something material. Furthermore, it does not need to build six additional 'fabs' to get to 25,000 WSPM.  On the other hand, expanding the Arizona fab beyond 25,000 WSPM might be a logical thing to do.

TSMC currently operates six GigaFabs — production facilities with a capacity of 100,000 or more WSPM — in Taiwan that process 300-mm wafers. Such facilities cost around $20 billion, they have to work at a very high utilization rate to be profitable, and they are meant to minimize costs per wafer. Such giant production facilities are usually built in multiple phases. Sometimes, new modules are added to these huge semiconductor production facilities to implement new technologies.

TSMC has multiple big customers in the U.S., including Apple, AMD, Qualcomm, and Nvidia. To serve them, 20,000 WSPM would not be enough. Therefore, unless TSMC only wants to serve select government and military contracts in the U.S., it will have to expand the Arizona fab over time.  

TSMC's current six GigaFabs are situated in different locations in Taiwan, so it is highly unlikely that the company has any intentions to build six more GigaFabs in the U.S. any time soon. On the other hand, it can expand its Arizona fab in multiple phases as demand for its manufacturing services increases. At this point that's largely speculation. TSMC (and other foundries) only commit to expansions when it sees demand from customers. Since the Arizona facility is only expected to start operations in 2024, it's perhaps too early to discuss plans to expand this fab.