After an analyst called TSMC’s Arizona plant a “paperweight” because all the chips it produces would have to be sent to Taiwan for final production, the state’s governor said that could change.
Gov. Katie Hobbs said during a visit to TSMC in Taiwan that the state and chipmaker Apple are “talking” about upgrading the plant’s capacity…
TSMC Arizona Plant: History So Far
The top news stories last year sounded like a major success for the US CHIP Act, which was intended to encourage chip makers to build American factories, helping the US economy and creating jobs for American workers. Apple proudly announced that it will be sourcing American-made chips for some of its devices.
The reality turned out to be somewhat different. The plant will only be able to produce larger technology chips suitable only for older Apple devices. TSMC demanded more subsidies and fewer regulations. The project is behind schedule and over budget, and production has already been pushed back to 2025 rather than 2024. There is talk that American-made chips will cost more than chips made in Taiwan, meaning Apple will likely only buy a token number of them.
Job creation in the US was thrown into question after TSMC decided to bring in about 500 Taiwanese workers to speed up construction work, and the battle over the issue quickly turned ugly.
A report released last week made it clear that the Arizona plant will be even less productive than previously thought. Not only will it be able to produce old chips, but it will not even be able to complete their production.
While Apple chips may be manufactured in the US, they will still have to be shipped back to Taiwan for packaging before they end up in the hands of an Apple device.
Packaging is the name given to the process of placing different circuit boards as close together as possible before encapsulating them into a single chip. For example, the iPhone places memory directly above the processor to improve performance and reliability.
Packaging is a complex process, and only TSMC’s Taiwan factories are capable of handling it.
Governor says the situation could change
Bloomberg reports on the latest developments.
A Taiwanese semiconductor company and Arizona officials are discussing adding advanced chip packaging capacity to the chipmaker’s factories in the state, Gov. Katie Hobbs said in Taipei on Tuesday.
The statement is as vague as it gets, and the fact that Hobbs simultaneously denies that construction of the plant is behind schedule does not inspire confidence.
Arizona and TSMC are “working out some kinks,” Hobbs said, but she is “very impressed with the speed at which it was built” and the project remains on schedule.
TSMC announced during its latest earnings call that the plant will now begin operations in 2025 rather than 2024. I certainly don’t expect the plant to add chip packaging capacity.
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