TSMC: Fire Near 5nm Site, Rumored Price Hike, & $4.5 Billion Debt For U.S. Fab 

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The Taiwan Semiconductor Manufacturing Company (TSMC) plans to raise funds for its new chipmaking facility in the United States as chip manufacturers deal with a global shortage. TSMC is responsible for providing products to some of the world's largest companies, and the Taiwanese semiconductor foundry's latest chip manufacturing technologies have placed it at the forefront of the industry.

In addition to its Arizona subsidiary announcing a debt offering for the U.S. chip facility, TSMC also battled a fire at the site where its chipmaking facility is located for the leading-edge 5-nanometer (nm) chip process. The fire started at an under-construction water processing facility and has been controlled since then.

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TSMC's Arizona plant is overseen by the company's subsidiary registered in the state. The subsidiary, TSMC Arizona, filed a prospectus with the Securities and Exchange Commission (SEC) earlier this week, in which it outlined its plans to sell debt worth $4.5 billion. While the prospectus, which is a document that informs potential investors about the nature of the company soliciting investment and the use of the funds generated, does not explicitly mention constructing a semiconductor fabrication plant, it is highly likely that the funds will be used for purposes associated with this.

The prospectus states that the funds generated will be used for administrative purposes by stating that:

The estimated net proceeds of the sale of the Notes after deducting estimated underwriting discounts and commissions and other expenses payable in connection with the offering of such notes will be approximately US$4,456.3 million, which we intend to use for general corporate purposes.

Additionally, TSMC also expects equipment in the Arizona fabrication plant to be in place by the second half of next year, confirming statements made by a key supplier in July.

According to TSMC Arizona:

TSMC Arizona Corporation, a corporation incorporated under the laws of the State of Arizona, U.S.A. in November 2020, or the Issuer, is a wholly-owned subsidiary of TSMC Limited. TSMC Arizona is expected to be primarily engaged in the manufacture and sale of integrated circuits. TSMC Arizona plans to spend approximately US$12 billion from 2021 to 2029 to build and operate an advanced semiconductor manufacturing facility, Fab 21, in the City of Phoenix area. Construction of the fab commenced in April 2021 and equipment is expected to be moved into the fab during the second half of 2022. TSMC Arizona targets to commence commercial production in 2024.

Smoke billows from an under-construction water plant near TSMC's 5nm chip manufacturing plant in Nan-ke, Taiwan. Image: Xie Jinsheng/UDN

As its Arizona subsidiary was busy raising funds for the new plant, back in Taiwan, a water plant being built for TSMC in the same locality as its 5nm chip fab caught fire. The fire led to two workers from the scene being rescued, and an early investigation by the local fire department speculated that foam in the plant area caught fire from sparks generated through electrical welding.

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According to the Nan-ke Administration Bureau, sparks generated while a pipeline was being welded traveled through the pipe due to wind towards foam present in the construction site. TSMC's response to the matter clarified that it is not managing the plant's construction and that it will take over once the facility is built.

After reports of an across-the-board price increase in the chipmaking sector earlier this year, fresh rumors from Taiwan bear news of more hikes. According to news outlet Jiwei, TSMC might further increase prices from the start of next year, as another Taiwanese chipmaker UMC, has reportedly notified its customers of a sub-10% hike from January.

Responding to requests from the United States Department of Commerce to share supply chain data, TSMC announced yesterday that it would submit this data by the 8th of next month. TSMC's statement reads as:

"Looking forward, to increase the demand visibility in this complex supply chain should be the path to avoid such shortage from happening in the future. We have been a strong partner in this effort and will continue taking actions to address this challenge."

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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