Phoenix City Council okays development deal with TSMC for $12 billion U.S. chip factory

City officials in Phoenix, Arizona on Wednesday unanimously voted to authorize a development agreement with chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) that would provide $205 million in city funds for infrastructure such as roads and water improvements for a $12 billion U.S. semiconductor fab backed by the Trump administration.

TSMC secures government subsidies and picks site for $12 billion U.S. plant

Stephen Nellis for Reuters:

TSMC is the world’s biggest contract chipmaker and manufactures semiconductors for Apple Inc, Qualcomm Inc and a range of other technology companies. The company in May disclosed its intentions to build a 5-nanometer chip factory in Arizona, which would be its first advanced manufacturing facility in the United States. Earlier this month it approved an investment to set up a wholly owned subsidiary in the U.S. state with paid-in capital of $3.5 billion.

The Phoenix City Council voted to allow the city to enter the agreement by a vote of 9-0. Ahead of the vote, Phoenix Mayor Kate Gallego called the agreement “a great success across so many levels of government in helping Arizona become a leader in advanced manufacturing.”

Under the agreement, TSMC will build a new factory and create 1,900 new full-time jobs to be phased in over a five-year period. Construction would start in early 2021, with factory production expected in 2024.

TSMC has said it also hopes for U.S. federal subsidies to help cover the extra cost of building chips in the United States… American lawmakers in June proposed billions of dollars in subsides to help bolster advanced semiconductor manufacturing in the United States.

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  1. TSMCs success is largely because of the investment by Apple when Apple needed a reliable chip fab after having been shafted by Samsung,

    I hope that those at Samsung who thought that ripping off Apple would be a clever idea are looking at the rise of TSMC and realising that this success could have been theirs if they had behaved more honestly.

    Words like karma and Schadenfreude come to mind.

  2. This could be huge over the years. If Apple’s M1 and future M CPUs take off and dominate, TSMC might be building many new factories. Hopefully more here.

    But China Joe, if he has his way will side with China’s CCP and kill this deal and push everything back to “made in China”. Maybe Hunter will get put on the board of directors for chip FABs. He is so knowledgable in that sector./s

  3. This is a big deal. Having advanced chip machine capability in the US is a good way to spread risk for the business. TMSC is a good partner for Apple and hopefully this factory will start manufacturing on time (2024).
    By that time Apple will be leaps and bounds ahead of the competition and they will need SoC chip production to be across the world to cope with demand.

  4. Not sure why TMSC expects the federal government to subsidize chips Apple. It’s one thing for Phoenix to pay to upgrade infrastructure — that’s what a city SHOULD do. But expecting Federal hand-outs is just as bad as expecting massive tax abatements (like Foxcomm in Wisconsin). It makes no sense.

    1. As I understand it, the federal government offered financial enticements to attract companies to build chip fab plants in the USA. TSMC is planning to build a cutting edge facility in Phoenix and I would have thought this is exactly the sort of scheme which the government enticements were intended to support.

      Having the local government building about $200 million of enhanced infrastructure ( roads, water and drainage ) seems like a good deal all round if it attracts a business like this.

        1. Translation: John Dungler, LF (F)artist is a big communist who sells his art at vomitously high prices because he’s an elitist capitalist who should be swinging from the trees as a traitor to Biden Harris Sanders, because he won’t give his art out for free – only his (f)arts are free.

    2. This is exactly correct. Federal and local government should seek to provide any necessary infrastructure improvements (roads, electrical, sewage, schools, zoning modifications, etc.) but over-generous tax breaks, subsidies, etc. are usually both unwise and unnecessary. Localities should carefully examine their tax structure and zoning restrictions to ensure that they are not onerous, over-complicated, or unnecessary, but beyond that, such sweetheart deals to gigantic, for-profit companies are usually nothing more than corporate welfare, cronyism, and/or political stunts.

      In particular, when local governments start using the power of eminent domain for the benefit of private corporations, that should raise multiple red flags. If a company receives tax breaks or subsidies, they should only kick in once promised manufacturing plants are completely up and running.

      Again, just read what Foxconn and the government did in Wisconsin, and it will make you extremely mad.

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