Biden hails US manufacturing’s return as TSMC triples chip investment to $54b in Arizona

US President Joe Biden with TSMC chairman Mark Liu at the Taiwanese chipmaker's facility in Phoenix, Arizona, on Dec. 6, 2022. PHOTO: BLOOMBERG

PHOENIX – United States President Joe Biden visited TSMC’s new Arizona plant on Tuesday as the Taiwanese chipmaker said it would add a second facility at the site, more than tripling its planned investment there to US$40 billion (S$54 billion), among the largest foreign investments in American history.

The expanded investment is a big win for Mr Biden after supply chain issues disrupted the US economy early in his presidency.

“American manufacturing is back, folks,” Mr Biden said in a speech against the backdrop of the new factory draped with an American flag and a large banner that read: “A Future Made in America, Phoenix, AZ.”

Mr Biden’s recent trip to Asia convinced him the US is in a better position to lead the world economy in the years ahead “if we keep our focus”, he said.

Mr Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co, or TSMC, estimated annual revenue of US$10 billion when both chip fabrication plants open, adding that customers would have annual sales of US$40 billion from products using chips made there.

Apple, Nvidia and Advanced Micro Devices, all major TSMC customers, said they expected their chips to be made in the new plants.

“We work with TSMC to manufacture the chips that help power our products all over the world. And we look forward to expanding this work in the years to come as TSMC forms new and deeper roots in America,” Apple chief executive Tim Cook said in a speech.

Also joining Mr Biden at the facility’s opening ceremony was TSMC founder Morris Chang, chipmaker Micron Technology CEO Sanjay Mehrotra and Nvidia CEO Jensen Huang, among others.

The first plant, scheduled to be operational in 2024, will make a more advanced chip than initially announced.

TSMC, the world’s largest contract chipmaker, is a leading supplier to major US hardware manufacturers. Its US$40 billion funding for the two facilities is the company’s largest investment outside of Taiwan.

“Bringing TSMC’s investment to the United States is a masterstroke and a game-changing development for the industry,” Nvidia’s Mr Huang said in remarks prepared for Tuesday’s event.

TSMC’s expanded investment in Arizona is the latest in a string of major investments announced by chipmakers since the Chips and Science Act passed this summer. These include IBM, Micron Technology and Wolfspeed.

TSMC’s second facility, to be built near its first, will produce so-called “3 nanometre” chips by 2026, the most advanced currently in production.

TSMC is also planning to build an industrial water reclamation plant. Chipmaking is a water-intensive process, and Arizona, which is largely desert, is increasingly struggling with water shortages.

TSMC’s Mr Liu said its Phoenix factories are expected to create 13,000 high-tech jobs, including 4,500 under TSMC and the rest filled by suppliers.

Mr Biden has sought to boost semiconductor production after the Covid-19 pandemic caused supply chain problems that led to shortages of chips for vehicles and many other items.

US semiconductor production accounts for just 12 per cent of the global total, down from 37 per cent two decades ago, said a White House report on supply chain problems last year.

Taiwan’s dominant position as a maker of chips used in technology from cellphones and cars to fighter jets has sparked concerns of over-reliance on the island, especially as China ramps up military pressure to assert its sovereignty claims.

The US$52.7 billion Chips and Science Act, signed into law in August, is aimed at preventing a resurgence of supply chain woes. REUTERS

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