TSMC's CFO Wendell Huang shared last week that the firm is seeing strong demand from US customers. The executive's comments came after the Taiwanese firm's latest earnings report, which also saw it announce an additional $100 billion investment in the US. Huang outlined that TSMC's 3-nanometer facilities in the US should come online by the second half of next year and added that the costs of building facilities in the US were higher than in Taiwan.
TSMC CFO Says US Fabs Cost Four To Five Times More To Build Than In Taiwan
TSMC's latest $100 billion announcement will expand the firm's presence in Arizona and build four new facilities. During the earnings call, CEO C. C. Wei discussed the latest investment. The CEO remarked that his firm's customers were quite optimistic about the demand for semiconductors and AI chips. The CEO added that TSMC's investment in Arizona would also depend on the market situation.
In his interview with CNBC after the earnings, the firm's CFO Wendell Huang shared more details. Like Wei, he outlined that the firm was witnessing a multi-year demand. He explained that a multi-year demand increase was the reason TSMC was increasing its investment in Arizona:
"But we decided to continue to increase the investment in Arizona because it's a multi-year structured demand increase. Okay, so, for us, in Arizona, we're doing really well. We're very happy about it. Our phase one, using N4 technologies is up and running. The yield is as good as its mother fab in Taiwan. Phase two will be moving in tools very soon. It will be N3 technology. Phase three will be N2 technology the construction has already begun. And phase four, and the first phase of the advanced packaging fab in the US, the preparation works have started. So we're doing very well, we're seeing strong demand from the customers. And we also receive very strong support from the US government. Federal, state, city, very strong support. So we decided to increase our investment in Arizona by another 100 billion US dollar."
With TSMC's most advanced chip manufacturing facilities, i.e., the ones that manufacture 2-nanometer chips, being in Taiwan, the CFO also commented on the technology roadmap for the Arizona site.
According to Reuters, Huang had also explained the reason behind this. He had commented that "when you ramp the most leading-edge technologies, you need very close collaboration between the R&D and operation functions. It has to be in Taiwan. And after it stabilizes, then we can consider transferring overseas."
As for the Arizona roadmap, he remarked:
"We expect the phase two, using 3-nanometers to be online, in the second half of 2027 and phase three and phase four will follow. But as you said, it depends on market conditions, customer demand. At this moment, we like to do it as soon as possible."
When it comes to TSMC's US investment, one of the most pressing concerns raised by Taiwanese analysts is the cost of the buildout. While Huang admitted that the buildout is expensive, the executive continues to be optimistic:
"The expansion overseas is more expensive. It takes four to five times more in constructing fabs in the US compared to Taiwan. Therefore there will be dilutions from overseas fabs. I'll give you example. Phase one started from dilution, it will improve, the profitability of phase one will improve. Although it may not reach the Taiwan's level, but it will improve. Then phase two comes in, and phase two will improve. But then phase three comes in, so, that's why we're saying, in the five year period, between 2024 and 2029, the dilution at first will be two to three percent a year and widen to three to four percent a year. That's because the size is getting bigger and bigger."
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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