TSMC accelerates construction of Arizona gigafab cluster

Taipei, July 17 (CNA)  Taiwan Semiconductor Manufacturing Co. (TSMC) is accelerating the construction of its second and third wafer fabs in Arizona, with the aim of establishing a global gigafab cluster in the U.S. state.

Speaking at an investor conference held on Thursday, TSMC Chairman C.C. Wei (魏哲家) said Arizona is expected to serve as a hub for the company to provide sophisticated chips for the production of smartphones, artificial intelligence applications and high-performance computing (HPC) devices.

The first fab in Arizona started mass production in the fourth quarter of last year, using the advanced 4-nanometer process, with a yield rate as good as the same technology in TSMC's Taiwan facilities, Wei said.

Construction of the second fab has been completed, and it will use the more advanced 3nm process--the latest technology TSMC has begun mass producing in Taiwan. TSMC is working to begin production at the Arizona site several quarters ahead of schedule to meet strong client demand, Wei said.

TSMC has broken ground on the third fab, which will use the 2nm process and A16 process. Wei said demand for chips used in AI-related applications remains strong.

The three fabs are costing TSMC US$65 billion. The chipmaker has pledged to invest an additional US$100 billion over the next few years to build three more fabs, two IC assembly plants and one research and development center in Arizona.

The additional investments in Arizona are expected to make the U.S. state an independent semiconductor cluster in the U.S. market and provide about 30 percent of TSMC's advanced production, referring to the 2nm process and more sophisticated technologies, Wei said.

In addition to the U.S., TSMC has also been diversifying its production in Japan and Germany.

TSMC's first fab in Kumamoto began mass production at the end of 2024, producing chips using mature 12nm, 16nm, and 28nm process technologies. The second fab, originally scheduled to begin construction in early 2025 and start operations in late 2027, will produce more advanced 6nm and 7nm chips, along with 40nm technology.

In early June, Wei acknowledged that the second plant in Kumamoto had been "slightly delayed" due to local traffic concerns.

On Thursday, the TSMC chairman said construction of the second fab in Kumamoto is scheduled to start later this year but an exact timeframe will depend on the progress of the city's infrastructure projects.

In Dresden, Germany, TSMC is building a fab using specialty technologies and the plan is proceeding very well, Wei said.

In Taiwan, TSMC will build 11 wafer fabs and four advanced IC assembly plants over the next few years, he added.

Currently, TSMC is building fabs in Hsinchu and Kaohsiung with mass production to begin later this year, using 2nm technology.

TSMC Chief Financial Officer Wendell Huang (黃仁昭) said over the next five years, investments in overseas fabs are expected to dilute the company's gross margin -- the difference between revenue and cost of goods sold -- by 2-3 percentage points initially and 3-4 percentage points later.