Atop a newly completed 3.5 million square foot building located on 1,100 acres in the Arizona desert north of Phoenix, there is a giant microchip logo and the letters TSMC.
Taiwan Semiconductor Manufacturing Company Arizona's first chip manufacturing plant, or FAB, is making history because it is the most advanced chip manufacturing plant on American soil, and apple It has committed to being the site's largest client.
CNBC first visited the plant in 2021, shortly after TSMC's start-up. The company initially announced that the factory would cost $12 billion and would crank out 5-nanometer chips by the end of 2024. Three years later, the price tag had risen to $20 billion, and full production was delayed until 2025.
Instead, the manufacturer conducts trial production, making samples of chips and sending them to customers for verification. TSMC has committed to building two more factories on the site by the end of the decade, for a total investment of $65 billion.
The project is “close to the original schedule,” TSMC Arizona Chairman Rick Cassidy told CNBC during an exclusive first look at the completed project in November.
“When we came to the United States, we knew we were going to go through an educational process,” Cassidy said. “Whether it allows, learning how to work with trades, learning how to work with unions, local labor laws. We've learned a lot. Now we've overcome those things.”
TSMC Arizona Chairman Rick Cassidy takes CNBC's Katie Tarasoff around the company's newly completed manufacturing plant, where it will manufacture advanced chips on U.S. soil for the first time, on Nov. 7, 2024.
Andrew Evers
With the help of about 2,000 employees, the manufacturer is set to manufacture more advanced chips than originally planned. TSMC said it will produce 4-nanometer chips, at a rate of 20,000 chips per month.
The chips cost upwards of $18,000, according to a Morgan Stanley report. The price continues to rise, along with TSMC The value of the stock with it Over the past two years.
“We've seen TSMC be able to set their price, and everyone will pay it because right now it's the reliability and quality that's needed,” said Daniel Newman, CEO of Futurum Group.
“On par with our Taiwanese compatriots”
The plant's revenues are expected to be “on par with our Taiwanese nationals,” Cassidy said. However, about 92% of the world's most advanced chips are currently made by TSMC's Taiwan factories, so the United States is far from self-reliant.
“It is difficult or impossible for the United States or any country to achieve complete self-sufficiency in everything it needs to build semiconductors,” said Stacy Rasgon of Bernstein Research. “This is a pipe dream.”
Despite being the birthplace of microchips in the 1950s and remaining a major center for chip design, the United States now makes only 10% of the world's chips and none of the most advanced chips. When supply chain chaos collided with surging demand for consumer electronics during the pandemic, the resulting chip shortage exposed the significant risks of relying on outsiders for such vital technology.
If there is aggression between China and Taiwan, or an earthquake or other event affects Taiwan for a period of time, “the entire market, the entire world could suffer from a lack of availability of high-end nodes,” Newman said.
A deadly 7.4-magnitude earthquake in April briefly halted production in Taiwan and left TSMC losing $92 million. Cassidy said Arizona buildings are “well prepared” for earthquakes.
TSMC's first manufacturing plant in Arizona, where it will produce advanced chips on US soil for the first time, will be seen in November 2024.
TSMC
Other concerns arose when President-elect Donald Trump expressed opposition to the $52 billion CHIPS Act in October during his campaign. Weeks later, the US Commerce Department finalized TSMC's $6.6 billion allocation from the bipartisan bill.
“Repealing the CHIPS Act would make Americans less safe,” Commerce Secretary Gina Raimondo told CNBC in an interview, adding that she does not believe the next administration will repeal it.
“I don’t think they will,” Raimondo said.
Talks with TSMC about bringing advanced chip production to the United States began in 2018, during Trump's first term.
“I made a phone call between the head of TSMC and the head of Apple,” said Wilbur Ross, who was Commerce Secretary at the time. “Apple has become very supportive of the idea of TSMC coming in.”
Rose Castanares, a 26-year company veteran who currently serves as president of TSMC Arizona, also participated in the early talks. Customers “wanted flexibility of supply,” Castanares said.
Reliance on chips from Asia has also complicated the United States' drive for technological dominance. That's why President Joe Biden has hit the chip industry with a complex web of export controls aimed at preventing China from moving forward with advanced technology.
In October, some TSMC chips were spotted in Huawei devices, despite a ban on selling them to the Chinese company.
“This problem is as old as time,” Newman said. “There is a lot of complex redirection of goods to reach the gray market to different countries that have limited access to leading or more advanced technology.”
TSMC Arizona President Rose Castanares with CNBC's Katie Tarasoff at the newly completed manufacturing plant, where it will produce advanced chips on U.S. soil for the first time, on Nov. 7, 2024.
Andrew Evers
Workers, water and energy
Nearby, in Chandler, Arizona, Intel It is also building two huge factories.
The American company has a completely different business model, as it designs and manufactures its own chips, while TSMC only manufactures chips for others. Cassidy said the relationship between the two companies is strong.
“We meet with (Intel) weekly and receive feedback by helping them increase their ratings,” Cassidy said. “We help them train on more advanced things, so I think they're very happy with what we're doing.”
Both companies have delayed timelines for full production at their new factories in Arizona. But while TSMC remained the undisputed leader in advanced chips, Intel stumbled repeatedly.
The two will also compete for a scarce resource in the US chip industry: workers.
“When we finished building this plant, it was actually the first advanced manufacturing plant built in the United States in at least 10 years,” TSMC's Castanares said. “Semiconductors are a very difficult technology.” “The experience is not here in the United States.”
At the beginning of the project, TSMC sent about 600 engineers for training in Taiwan. Process integration engineer Jeff Patz spent 18 months there starting in 2021.
“The goal was to go and actually make things, right? And learn how to make them,” Patz said. “You must have a kitchen to cook.”
TSMC has also brought in experts from Taiwan for three-year temporary assignments. The company plans to employ at least 6,000 workers by the time the three factories are completed.
“For engineers, we are actively recruiting at universities in Arizona and throughout the United States,” Castanares said. ASU “also has what they call TSMC Day.”
Water is another scarce resource that is in high demand.
With Taiwan recently facing its worst drought in nearly a century, TSMC is no stranger to recycling the vast amount of water it needs to make chips. TSMC will consume 4.7 million gallons of water per day to operate the first plant in Arizona, but will reduce that demand to 1 million gallons per day, in part by recycling about 65% of that, the company said.
It also takes a huge amount of energy to make chips.
TSMC has built solar capacity on the site, but it is not enough to cover the 2.85 gigawatt-hours per day needed to operate the first plant. This is equivalent to the energy used by about 100,000 American homes. TSMC said it is buying renewable energy credits to offset this. But amid the data center boom fueled by artificial intelligence, Arizona's largest company has warned that it may run out of transmission capacity before the end of the decade.
That's also when TSMC plans to start production at its third factory in Arizona, which Cassidy said “will likely be 2nm and more advanced.”
TSMC is also expanding its global footprint. It opened its first factory in Japan in February, and began work on an $11 billion factory in Germany in August.
Within the United States, Cassidy said TSMC is also likely to continue expanding.
“There's room for a lot of manufacturers,” Cassidy said.
Watch the full video for never-before-seen footage inside TSMC's Arizona factory: https://cnbc.com/video/2024/12/12/inside-tsmcs-new-chip-fab-where-apple-will-make- chips in the United States
