With TSMC, U.S. forecast to become No. 2 in advanced IC production in 2027

Taipei, Nov. 23 (CNA) With Taiwan Semiconductor Manufacturing Co. (TSMC) pouring large funds into the U.S. state of Arizona, the United States is expected to see an improvement in its status to become the second largest maker of advanced semiconductor processes in 2027, according to Taipei-based market information TrendForce Corp.

In a recent research report, TrendForce said it estimates the U.S. will account for a 21 percent share in the global advanced IC production market by 2027, sharply up from the current 9 percent, taking the No. 2 place, moving one notch up from its current spot, as TSMC is investing US$65 billion to build three wafer fabs in Arizona.

TrendForce defined the so-called advanced processes as the 7-nanometer process or more sophisticated technologies. The 3nm process is the latest technology TSMC has launched, with mass production in Tainan, while the chipmaker is developing the more sophisticated 2nm and even 1.4nm processes.

For Taiwan, its share of advanced IC processes in the global market is expected to fall to 54 percent in 2027 from the current 71 percent, although the country will retain the No. 1 spot in 2027, according to TrendForce.

South Korea is likely to see its market share falling to 9 percent in 2027 from the current 11 percent, with its ranking expected to fall to third place from the current second, TrendForce said.

TSMC is currently building two advanced fabs in Arizona. The first is scheduled to start mass production using its 4 nm process in early 2025, while the second is slated to mass produce wafers using the 3 nm and 2 nm processes in 2028.

On April 8, when TSMC signed a preliminary non-binding agreement for subsidies of up to US$6.6 billion, the company announced a plan to build a third fab in Arizona using the 2 nm process or more advanced technology with production slated to start by the end of 2030, boosting its total investment in Arizona to over US$65 billion.

On Nov. 15, the U.S. Department of Commerce (DOC) announced it has signed a final agreement with TSMC for the US$6.6 billion direct funding under the CHIPS Incentives Program's Funding Opportunity for Commercial Fabrication Facilities with the Taiwanese chipmaker pledging to bring the state-of-the-art chip-making process -- A16 technology -- to the United States.

In addition to the direct funding of up to US$6.6 billion, the CHIPS Program Office will provide up to US$5 billion of proposed loans to TSMC.

According to TSMC, its A16 technology, an upgraded version of the 2nm process, is a next-generation nanosheet-based technology featuring Super Power Rail, which it describes on its website as "an innovative, best-in-class backside power delivery solution" that "improves logic density and performance by dedicating front-side routing resource to signals."

Market analysts expect demand for the A16 process to come from high-performance computing suppliers as the boom in artificial intelligence development continues.

Right after the DOC announced the award of the US$6.6 billion subsidies to TSMC, the Semiconductor Industry Association (SIA) lauded the move.

"We commend the U.S. Department of Commerce and TSMC for working diligently to finalize this agreement, which will expand crucial advanced manufacturing capacity here at home and help promote U.S. leadership in the game-changing technologies of the future," the SIA said in a statement.

"This agreement will strengthen America's economic and national security, while also creating thousands of construction and manufacturing jobs," the association said.

In addition to TSMC, the DOC has also awarded up to US$1.5 billion in subsidies to U.S.-based pure play wafer foundry operator GlobalFoundries Inc. for its production expansion valued at around US$13 billion over the next 10 years in the states of New York and Vermont.

According to the SIA, investments by GlobalFoundries are expected to advance U.S. production of semiconductors for automotive, communications and national defense use.

In response, Ray Yang (楊瑞臨) from the Industrial Technology Research Institute said after President-elect Donald Trump returns to the White House in January, the U.S. government is expected to further push for the Made in America initiatives by cutting business taxes and raising tariffs to build a more comprehensive semiconductor ecosystem.

According to a projection made by SIA-Boston Consulting Group, the U.S. will triple its domestic semiconductor manufacturing capacity in 2032, compared with 2022, when the CHIPS and Science Act went into effect.

The consulting firm also projected capital expenditure in semiconductors of the U.S. will account for more than one-quarter (28 percent) of the global total during 2024-2032.