TSMC delays 3nm Arizona fab by a year, cites lack of U.S. subsidies and waning demand

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TSMC faces another setback in the U.S.

TSMC
(Image credit: TSMC)

TSMC, the world's top foundry, is set to delay the deployment of its second fab in Arizona by at least a year compared to the initial schedule, the company said this week. Furthermore, the company is also backtracking on its prior commitments of which nodes the factory would produce, so now it isn't clear whether the Fab 21 phase 2 will make chips on its 3nm process technology or a different node. The delays and ambiguities about the project stem from uncertainties with demand as well as U.S. government decisions concerning subsidies.

"The second fab shell is under construction, but what technology [to use] in that shell is still under discussion," said outgoing chairman Mark Liu at the company's conference call with analysts and investors (via SeekingAlpha). "I think that also has to do with how much incentives that fab, the U.S. Government can provide. […] The current planning [for the fab] is '27 or '28, that will be timeframe."

When TSMC announced plans to increase investment in its Arizona site to $40 billion in total (up from $12 billion for 5nm/4nm-capable Fab 21 phase 1) in late 2022, it said that its Fab 21 phase 2 would be capable of making chips using its N3 family of process technologies (3nm-class) and would come online in 2026. It also indicated that the two Arizona fabs would feature a capacity of over 600,000 wafer starts per year (50,000 wafer starts per month).

Uncertainties with subsidies from the U.S. government under the CHIPS Act, as well as demand from its clients, apparently made the company delay the fab's deployment by at least a year. As a result, now that the fab is coming online in 2027 or even 2029, and the company now questions whether it needs to build a 3nm-capable fab at the time, or rather equip it to make chips on its N2 (2nm-class) production technology or more advanced. Or perhaps, TSMC could opt for a more mature fabrication process.

"To be honest, most of the fab in overseas, what technology is being set up, really, it is a decision of customers' demand in that area at that timing," Liu said. "So, nothing is definitive, but we are trying to optimize value for the overseas fab for TSMC."

There is good news, though. After facing multiple setbacks with Fab 21, its first advanced fab in the U.S., TSMC now firmly states that the facility is coming online in the first half of 2025. 

"We are well on track for volume production of N4, or 4nm process technology, in the first half of 2025 [in Arizona] and are confident that once we begin operations, we will be able to deliver the same level of manufacturing quality and reliability in Arizona as from our fabs in Taiwan," Liu stressed. 

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Anton Shilov
Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

8 Comments Comment from the forums
  • stonecarver
    TSMC Might Bring 3nm Production to U.S. Nov 9,2022

    TSMC Commits to $40 Billion Investment of Arizona Fab With 3nm by 2026 Dec 6,2022

    TSMC Postpones Mass Production at Arizona Fab to 2025 Jul 20.2023

    US government doles out paltry $35 million of the $52 billion CHIPS Act, warns of possible delays in Intel and TSMC fab buildouts Dec 12,2023

    TSMC and Arizona labor unions come to agreement, fab construction back on track Dec 7,2023

    TSMC delays 3nm Arizona fab by a year, cites lack of U.S. subsidies and waning demand Jan 18,2024
    Seems like a patern when you do the quick view of just the headlines.
    The current planning is '27 or '28, that will be timeframe."
    Also didn't the head guy from TSMC on that project get fired or retire recently.

    Fingers crossed it all works out in the end.
    Reply
  • JTWrenn
    I get why we do it...but I am really sick of so many industries sucking on the teet of our tax dollar while their owners get rich. Not just a little rich, crazy rich. Especially when they are not a company from the country giving out the subsidies. Screw them, give it all to Intel, or better yet, cut out all these giant conglomerate subsidies and give them to the middle class.
    Reply
  • tamalero
    JTWrenn said:
    I get why we do it...but I am really sick of so many industries sucking on the teet of our tax dollar while their owners get rich. Not just a little rich, crazy rich. Especially when they are not a company from the country giving out the subsidies. Screw them, give it all to Intel, or better yet, cut out all these giant conglomerate subsidies and give them to the middle class.
    Giving it all to intel will not secure the actual speeding up and building imho.

    Not the first time companies have had subsidies or monetary pushes just to pocket the money and put it to inflate returns for the leaderships and top investors.
    Reply
  • punkncat
    JTWrenn said:
    I get why we do it...but I am really sick of so many industries sucking on the teet of our tax dollar while their owners get rich. Not just a little rich, crazy rich. Especially when they are not a company from the country giving out the subsidies. Screw them, give it all to Intel, or better yet, cut out all these giant conglomerate subsidies and give them to the middle class.


    Understanding that all said these numbers seem so massive from our pedestrian view. This "giveaway" is actually going to create a site where large numbers of skilled and well paid employees will be paying taxes, as well as the taxes on the propery, various uses, utilities, the surrounding area when the growth inevitably happens. It is easy to sit back and "poop"can decisions like then when only looking at the narrow blinders "what is in my wallet" view, rather than the overall picture.

    This investment will more than pay off if they can keep their stuff together long enough to see it through.
    Reply
  • tamalero
    punkncat said:
    Understanding that all said these numbers seem so massive from our pedestrian view. This "giveaway" is actually going to create a site where large numbers of skilled and well paid employees will be paying taxes, as well as the taxes on the propery, various uses, utilities, the surrounding area when the growth inevitably happens. It is easy to sit back and "poop"can decisions like then when only looking at the narrow blinders "what is in my wallet" view, rather than the overall picture.

    This investment will more than pay off if they can keep their stuff together long enough to see it through.
    It does not in many cases. See the scams of Amazon warehouses.
    Where many of the promised jobs never materialize, most jobs ends being menial low paying jobs and the land ended being "gifted for pennies".
    Reply
  • punkncat
    tamalero said:
    It does not in many cases. See the scams of Amazon warehouses.
    Where many of the promised jobs never materialize, most jobs ends being menial low paying jobs and the land ended being "gifted for pennies".

    It is not at all unusual for large entities to get enticing tax breaks for moving a logistics hub, warehouse, offices and so forth into an area. There is a much larger picture here than to focus specifically on the subsidies.
    Reply
  • tamalero
    punkncat said:
    It is not at all unusual for large entities to get enticing tax breaks for moving a logistics hub, warehouse, offices and so forth into an area. There is a much larger picture here than to focus specifically on the subsidies.
    My point that there has been many companies who have abused these subsidies and done nothing back.

    Anyone remembers the cable companies too? got who knows how many millions with the push to improve their networks. They did nothing and passed the money as bonuses to high executives and leadership.
    Reply
  • JTWrenn
    tamalero said:
    Giving it all to intel will not secure the actual speeding up and building imho.

    Not the first time companies have had subsidies or monetary pushes just to pocket the money and put it to inflate returns for the leaderships and top investors.
    Very true but it is the lowest bar I would think to simply say subsidies only for the country of origin producer, but really it is all a race to the bottom. As long as one idiot country does this all the idiot countries have to do this or the facilities go elsewhere.

    So as I said I get why they do it, but it is all a horrible syphon for the rich to get richer and profits go way up while inflation marches on.
    Reply