TSMC Supplier Expects To Equip U.S. Chip Plant In September Next Year

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The Taiwan Semiconductor Manufacturing Company's (TSMC) plans to establish a semiconductor fabrication plant inside the United States moved forward today as its cleanroom equipment supplier received a contract qualification for the facility. TSMC plans to establish a new chip factory in Arizona, which will be capable of manufacturing semiconductors on the currently leading-edge 5nm process node. Jiangxi Hantang System Integration Co., Ltd, known to supply TSMC equipment for its fab, revealed the details in a conference today, with executives emphasizing the costs of building chip facilities in the U.S.

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According to Hantang, it should start installing equipment in the Arizona fab by September next year. This estimate is based on the company's previous experience of dealing with TSMC and other customers, with orders from the Taiwanese fab yet to be finalized. It expects orders for the equipment to be finalized by July, with plant construction expected to commence by the end of this year.

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Hantang also provided details about its planned operations for plant construction. It plans to send more than 20 of its top engineers to the U.S. for the Arizona fab, along with applying for 150 subcontractors. Additionally, the company also plans to hire 200 personnel in the U.S., including engineers and subcontractors, to bring down costs.

Further elaborating on the costs, Hantang chairman Mr. Chen Chaoshui stated that building a plant in the U.S. is expensive when compared to costs in Tawain. According to the executive, "If the United States builds one factory, Taiwan can build three or four factories." Cost multiplication in the U.S. has been bought up previously as well, with Taiwan Power Semiconductor Manufacturing Co.'s Huang Chongren commenting in the aftermath of Intel Corporation's $20 billion Arizona investment that the salary of a single American engineer is equal to that of six Taiwanese engineers.

The company's comments come as TSMC is rumored to expand its current U.S. fab plans. Under its defense spending bill, the American government has authorized incentives for companies looking to establish semiconductor manufacturing plants in the country. This has generated fresh fervor in the space, with Intel Corporation joined by Korean chaebol Samsung Electronics in announcing plans for American chipmaking facilities.

Semiconductor shortages in the wake of the ongoing pandemic generated by the increased demand for consumer electronics as the population across the globe shifted to remote working have placed chipmakers under a burden. With the bulk of the global chipmaking capacity limited in the island of Taiwan - which is also facing a historic drought - concerns about supply chain integrity have spurred not only the U.S. but governments across the European Union into action as well.

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TSMC's fab in Arizona is expected to commence mass-producing chip on the 5nm node in 2024, with a planned capacity of 20,000 wafers per month. Concerns about the plant's ability to churn out leading-edge tech are present because the current progress in chip manufacturing processes results in a node shrinkage every two years. TSMC plans to kick off mass production of the 3nm node next year, and the U.S. government will spearhead research in the sector by establishing a technology center to leverage public-private cooperation in the area.

During his company's latest earnings conference. TSMC's chief executive officer Dr. C.C. Wei stated that his company might expand its plans to build a fab in Nanjing, China. Dr. Wei conditioned this on customer demand, making us wonder whether a similar expansion for the Arizona fab might also be on the cards if TSMC's customers demand it. The company supplies chips to nearly every big-ticket tech firm, including Cupertino tech giant Apple Inc, Intel Corporation, NVIDIA Corporation and Qualcomm Incorporated.

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