TSMC's overseas expansion will only contribute 10% of the foundry's production capacity: Report

TSMC Lobby
(Image credit: Taiwan Semiconductor Manufacturing Co., Ltd.)

TSMC is making significant strides in Phoenix, Arizona, where it is about to start mass production of chips on its 4nm and 5nm-class process technologies at its Fab 21 phase 1 and is set to build to more phases by the end of the decade, which will significantly increase its production capacity and global footprint. However, TSMC's building of fabs in the U.S., Japan, and Germany has raised domestic concerns about industrial relocation from Taiwan, reports Taiwan TV News (TTV).

Following the success of TSMC's expansions overseas, in China, Germany, Japan, and the U.S., there are concerns in Taiwan about the potential impact on domestic industries, as the company is one of Taiwan's flagship manufacturers. However, experts like Bonnie Glaser from the German Marshall Fund have pointed out that even with full production, TSMC's overseas plants will contribute less than 10% of the company's global output, according to TTV. Unfortunately, TTV did not share any actual numbers.  

Taiwan's technology sector in general is very resilient. On the one hand, it is developing domestically, and recent reports about TSMC's plans for new fabs on the island just highlight this fact. On the other hand, Taiwanese companies strive for global expansion. TSMC's endeavors in Arizona emphasize its commitment to maintaining a strong global presence while continuing to drive technological advancements from its base in Taiwan.

In Arizona, TSMC is investing over $65 billion to build three phases of its Fab 21. The U.S. government has pledged $11.6 billion in financial aid to TSMC, including $6.6 billion in grants and up to $5 billion in loans, under the CHIPS and Science Act.

The construction site in Phoenix is a hive of activity, with around 8,000 workers on site daily, occasionally peaking at 12,000. The workforce is notably diverse, drawing talent from various ethnic backgrounds, which necessitates a strong emphasis on collaboration and cultural respect within the team, according to TTV.

As TSMC employees settle in Phoenix, they are forming new community clusters, which has created business opportunities for local entrepreneurs, leading to the establishment of Chinese supermarkets and Taiwanese restaurants in the area. The local economy is benefiting from the influx of TSMC employees and their families, reports TTV.

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.

  • Newoak
    Unfortunately, those diverse construction crews, will only keep working together, as long as the American government pays them. Once it stops, it will be like it never was. More needs to be done to educate the privelaged and largely homogenous workforce of big tech as to the tremendous advantage of diversity Billions in profits could be being missed out on. In G-d I trust.
  • Amdlova
    Sure with 30% premium what they say will charge for every chip off Taiwan..
    Who will want waste money outside Taiwan...
  • KnightShadey
    Admin said:
    TSMC's fabs in Germany, Japan, and the U.S. will contribute 10% of the company's capacity, so 90% of TSMC's output will remain in Taiwan.

    TSMC's overseas expansion will only contribute 10% of the foundry's production capacity: Report : Read more

    If that's capacity from top to bottom, that's still quite a lot of production.
    TSMC makes not only has production of 3,5,7nm chips for the latest & greatest, but also has loads of customer production on legacy 7, 12/14/16, 28, 40, 65, 90nm.

    The point isn't to offshore production for value or to impact Taiwan's economy, just to ensure there is some should the Chinese question become a statement. With intel's fabs' fortunes slowly improving also, that will be sufficient for 'security concerns'.
  • usertests
    Amdlova said:
    Sure with 30% premium what they say will charge for every chip off Taiwan..
    Who will want waste money outside Taiwan...
    It's not in TSMC's interest to build a factory that makes an unsellable product. And yes, they are paying for most of it, not the U.S. government.

    In the worst case scenario, Taiwan gets hit by the worst earthquake or invasion, and U.S. fabs become money printers going brrr. As long as the rest of the supply chain is available...

    Even if the process nodes are lagging behind Taiwan, they could create some high volume products that are good for the U.S. market, or chiplets that can be used such as I/O dies and 3D cache. They plan to produce N2 GAAFET chips at the second fab, so it's not like N5/N4 are the end of the line.