TSMC expands scale, prepares to invest 12 billion USD in building a new chip factory

TSMC, the world’s largest contract chipmaker, is preparing to invest in another billion-dollar plant in Arizona, according to the WSJ.

Specifically, an advanced semiconductor plant north of Phoenix will be built, located right next to the chip factory that the company committed in 2020. The scale of the investment is expected to be about $ 12 billion.

The move comes after the US agreed to provide semiconductor manufacturers with lucrative funding to bring this advanced manufacturing industry back to US soil. TSMC’s new facility will manufacture the smallest, fastest, and smallest 3-nanometer chip available today.

Sharing with WSJ, TSMC said that the capacity of the new factory will be equivalent to the predecessor factory in Arizona. Management is considering adding more advanced chip capacity, but has not made a final decision.

According to experts, the pouring of capital to build a new factory shows the long-term optimism of the memory chip maker in the context of market volatility. It is known that demand for some chips has fallen after two years of record growth. Many chip companies, including TSMC, have been forced to cut short-term spending plans in response to the downturn.

“ We used to not have enough chips, but now demand is falling. What signal is this sending? It highlights growing concern that we will soon face a recession ,” said Matt Maley, senior strategist at Miller Tabak + Co.

In the past, buying chips “in time” was considered the norm. Companies often place orders as close to production time as possible to avoid excess inventory, reduce warehouse capacity, and cut down on upfront spending. However, shortly after the outbreak of COVID-19 two years ago, these companies switched to a new strategy: hoard as many chips as possible.

After a period of recovery efforts, memory chip production gradually stabilized, while companies that hoarded chips began to feel the pressure.

” Holding used to be what they thought was necessary, until one day they looked at the warehouse and wondered, why am I buying so much? ” Hutcheson told Reuters.

According to Reuters, the chip surplus crisis will be uneven across sectors. Large semiconductor suppliers to consumer electronics companies are expected to be hit the hardest. The semiconductor sector specifically, such as chips for gaming graphics cards or serving cryptocurrency projects will also be severely affected.

“ Price will continue to fall, especially when the cryptocurrency market is on the verge of collapse ,” said one expert.

According to Wedbush analyst Matt Bryson, some high-end chip companies have also suffered little, such as TSMC, which still has to increase production due to high demand from Apple and some partners.

However, despite the industry-wide gloom in the short-term, executives still expect global revenue to double to more than $1 trillion a year over the next decade, thereby providing a basis for growth. huge investments. Spending budgets are also being boosted by many incentives to build factories in the US and Europe, in the hope of shifting the industry’s focus away from Asia.

Intel Corporation and memory maker Micron Technology are currently trying to balance short-term cash and capital investments to meet long-term needs.

This year, the US allocated about $39 billion in funding to chipmakers, while cutting rent taxes on some related equipment. Europe also offers many incentives to double its share of global production to 20% by 2030. Normally, large chip factories take several years to build and operate. The decision to pour capital should therefore be accelerated to catch up with the set target.

TSMC is currently planning to hold an inauguration ceremony in Arizona in December to install the first batch of production equipment at the factory announced 2 years ago. Advanced high-capacity 4-nanometer chips will be manufactured at this facility, followed by mass production in 2024.

The increase in subsidies for chipmakers by the US and European governments shows official recognition that semiconductors are not only important for national security, advanced weapons systems, but also for everyday life. According to the WSJ, TSMC has built many advanced production facilities in the country. The group is currently considering expanding its operations in Japan and Singapore.

According to the New York Times, TSMC currently manufactures most of the world’s most high-tech silicon chips. The chip line is the size of a fingernail with billions of microscopic transistors.

” The most advanced type of mass-produced semiconductor, used in smartphones, military technology and many other fields, is called a 5 nm chip. TSMC makes about 90% of it ,” a report said.

Experts say this is the most important link in the memory chip industry, but it is not known to many Americans because TSMC does not sell products directly.

” TSMC has been a leader in the field for the past three decades, defining business changes and pursuing technological advancements. Meanwhile Intel has lagged behind TSMC technologically. Ten years ago, Intel had the most advanced processing technology. Today, that’s not true anymore ,” said Chris Miller, professor of international history at Tufts University.

Via: WSJ, Reuters