Arizona project going well, TSMC says without disclosing yield rate

Taipei, Sept. 7 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) said Saturday that its massive investment project in Arizona, United States, has been making good progress in line with its plans, but the company did not give any information on the yield rate at the plant.

TSMC, the world's largest contract chipmaker, issued the statement following a news report about the plant's yield rate in its trial production phase, which was reported to be comparable to that of the company's established plants in Tainan, southern Taiwan.

In the statement, TSMC said its Arizona project was "proceeding as planned with good progression," without commenting on the yield rate, which is a measure of how many usable chips can be produced during a single manufacturing process.

On Friday, Bloomberg News reported that in the trial phase, the production yields at TSMC's first advanced wafer fab in Arizona were on par with its established plants in Tainan that manufacture chips on the 3nm process, the company's most advanced technology in mass production.

This is an early indication that "the marquee U.S. project is on track to achieve its targets," the report said, quoting a source familiar with TSMC's investments in Arizona.

According to the report, there were concerns that the Arizona plant would not be as efficient as TSMC's established facilities in Taiwan, in terms of production yields, after the chipmaker pushed back its full production target from 2024 to the first half of 2025, citing a shortage of skilled workers.

Through its subsidiary TSMC Arizona, the chipmaker has invested more than US$65 billion in Arizona, and the first fab there is expected to start mass production of chips on the 4nm process by the first half of 2025.

The second Arizona fab, which is currently under construction, is scheduled to start commercial production in 2028, rolling out chips on the 3nm and 2nm processes.

In April, TSMC announced plans to build a third fab in Arizona, and it set a goal of starting production on the 2nm process or more advanced technologies by the 2030, with the aim of meeting strong demand from its clients in the U.S.

The chipmaker is currently developing the 2nm process and is expected to start mass production in Hsinchu, northern Taiwan, in 2025, with Apple Inc. expected be the first client, buying the chips for its iPhones.

TSMC has said that when its Arizona fabs go into mass production, they will all churn out chips with the same quality and reliability as those produced in Taiwan.

Also in April, the U.S. Department of Commerce said it had signed a non-binding preliminary memorandum of terms (PMT) with TSMC for up to US$6.6 billion in direct funding under the CHIPS and Science Act.

TSMC plans to apply for U.S. Treasury Department Investment Tax Credits of up to 25 percent of the qualified capital expenditure at TSMC Arizona, according to the department.

As part of TSMC's expansion beyond Taiwan, it has opened a fab in Kumamoto, Japan, in a joint venture with Japan Advanced Semiconductor Manufacturing, Inc. (JASM), and they are expected to also establish a second plant there. Mass production at the first facility is scheduled to start at the end of this year.

Through another joint venture called European Semiconductor Manufacturing Co. (ESMC) in Germany, TSMC broke ground on a facility in Dresden in August. Construction of that fab is expected to start later this year, and mass production is scheduled for 2027.

As its overseas investments are expected to drive up operating costs, TSMC said, it will adopt flexible pricing strategies to achieve its long-term goal of at least a 53 percent gross margin, which refers to the difference between gross profit and total expenses, including interest payments and taxes.