TSMC will receive $5 billion incentive from U.S. for Arizona fab: Report

TSMC is poised to receive a federal incentive exceeding $5 billion for its site in Arizona, according to a Bloomberg report that cites sources familiar with the matter. The U.S. government is not yet ready to announce the incentive because it has to be finalized with the world’s largest contract maker of chips, but the sum looks very significant.

It is unclear whether TSMC—which produces chips for AMD, Apple, Intel, Nvidia, and Qualcomm—will receive $5 billion in grants or whether the sum includes grants, loans, and/or loan guarantees. Also, it is unclear whether it will use loans and loan guarantees to build and expand its site near Phoenix, Arizona, or will rather invest its own money.

If the information about $5 billion incentives for TSMC is accurate, then it is highly likely that the report about Intel’s award package of around $10 billion is probably also accurate. Also consider the fact that Intel’s projects in the U.S. are far more ambitious and costly than TSMC’s. For example, Intel is building a brand-new site in Ohio, which is set to cost over $100 billion. 

TSMC’s project in Arizona involves an investment of $40 billion to construct two semiconductor fabrication facilities. For the world’s No. 1 foundry, this is a way to diversify its geographical footprint and remain adaptable to the trend of onshoring semiconductor manufacturing. However, TSMC’s Arizona project has faced multiple setbacks.

TSMC commenced construction of its first new U.S. fab in early 2021, with the aim to start production at the facility in 2024. However, due to a reported shortage of skilled workers in the state, TSMC had to delay the installation of some fab tools and, therefore, push back the production start of the fab to 2025. The production facility — called Fab 21 phase 1 — will use TSMC’s 5nm-class process technologies, including N5, N5P, N4, N4P, and N4X. 

In addition to Fab 21 phase 1, TSMC also announced its Fab 21 phase 2 in late 2022. That fab was meant to produce chips on its 3nm-class production process, which includes N3, N3E, N3P, and N3X. While the fab shell is still under construction, installation of equipment for Fab 21 phase 2 was postponed earlier this year because of a lack of U.S. subsidies and demand uncertainties. Consequently, Fab 21 phase 2, which was expected to come online in 2025, is now anticipated to begin operations sometime in 2027 or 2028, a considerable deviation from the original schedule. 

It remains to be seen whether the incentive package will affect TSMC’s plans for Fab 21 phase 2.

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. 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.