Chipmaker TSMC plans Arizona factory expansion

TSMC (2330.TW), the world’s largest contract chipmaker and a major supplier to Apple Inc (AAPL.O), said on Wednesday it was constructing a building that could serve as its second chip factory in Arizona in the United States.

Taiwan Semiconductor Manufacturing Co Ltd said in an emailed statement to Reuters that it could use the building for future expansion but has not yet arrived on a final decision for a second chip manufacturing plant.

“In light of the strong customer demand we are seeing in TSMC’s advanced technology, we will consider adding more capacity in Arizona with a second fab based on operating efficiency and cost economic considerations,” the company said.

The Wall Street Journal first reported that TSMC’s investment in Arizona is expected to be around $12 billion which it committed two years ago, citing sources.

Last year, Reuters reported TSMC’s plans to build more chipmaking factories in Arizona, including discussions about whether its next plant should be a more advanced which could make chips with 3-nanometer technology compared to the slower, less-efficient 5-nanometer tech used in the existing factory.

The United States has been encouraging foreign tech firms to manufacture in the country and has actively supported local research, development and manufacturing after passing its CHIPS Act.

While the chips sector is bracing for waning demand as red-hot inflation squeezes spending, Taiwan faces a tougher situation – sandwiched between its largest export market China and its main international backer and arms supplier, the United States – especially as Beijing steps up military pressure to force Taipei to accept Chinese sovereignty claims.