TSMC on Wednesday officially started building its third semiconductor facility — Fab 21 phase 3 — near Phoenix, Arizona, according to a report from Bloomberg. The third module of the company's Fab 21 site will be capable of producing chips using the company's N2, N2P (2nm-class), and A16 (1.6nm-class) process technologies when it's completed, between 2028 and 2030.
The development coincides with rising political pressure on TSMC, as just last week Taiwan's parliament passed a law under which TSMC cannot export its most advanced fabrication process to overseas facilities and must get approval from the Taiwanese government to invest in its projects abroad. By late 2028, TSMC will have started production of chips on its A14 manufacturing process in Taiwan, so it will have the legal right to begin making chips on its N2P, A16, and derivative nodes in the U.S.
Construction of TSMC's Fab 21 phase 3 is a part of the company's project to invest $165 billion in its American production facilities, which was announced in March. Under the plan, Fab 21 module 3 and module 4 will produce chips on TSMC's 2nm-class process technologies (which includes N2, N2P, N2X, and A16), while Fab 21 module 5 and module 6 will use even more advanced processes, including A14 (1.4nm-class) and derivatives.
Although TSMC is investing a huge amount of money in its Fab 21 site — which will eventually house not only six fab modules, two advanced packaging facilities, and an R&D center — and plans to make it one of its major production hubs, it does not look like the contract chipmaker will be legally able to transfer its most advanced production technologies to Fab 21. This will affect its profitability, as the company charges premium for its leading-edge fabrication processes.
U.S. Secretary of Commerce Howard Lutnick visited the location, which is frequently described as the largest foreign-funded project ever undertaken in the U.S., on the week it broke ground. Lutnick has reportedly indicated that companies may need to deepen their U.S. presence to access federal semiconductor funding under the CHIPS and Science Act, suggesting that subsidies could be withheld from companies who do not meet expectations. However, the U.S. government is also legally bound to provide CHIPS Act funding to companies such as TSMC, Intel, GlobalFoundries, Texas Instruments, Samsung, and others through the end of 2026.
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