The prospects for one of President Joe Biden’s domestic policy priorities, the rebuilding of domestic chipmaking capabilities, suddenly look less promising.
Last year, TSMC postponed the production schedule for its first Arizona factory, which is slated to make 4-nanometer chips, by one year to 2025, citing problems hiring highly skilled workers.
Today, Liu said the volume production for the company’s second factory in Arizona would also be delayed to 2027 or 2028, from 2026. More importantly, the executive backpedaled on the type of chips the second factory would eventually make. Originally, the fab was projected to manufacture more advanced 3-nanometer chips. Now, Liu said the type of chips is yet to be determined. It would depend on government incentives and customer demand, he said. Smaller nanometer chips are faster and more power-efficient than larger ones.
When asked for comment about TSMC’s second Arizona factory delay, a U.S. Commerce Department spokesperson said the department “cannot comment on potential [Chips Act] applicants.”
TSMC’s latest delay is a big step back from what was promised two years ago. In December 2022, TSMC said it would expand its investments in Arizona to $40 billion for two factories, committing to making 4-nanometer chips in 2024 in the first fab, with a second to produce 3-nanometer chips by 2026. At the time, President Biden spoke at TSMC’s Arizona groundbreaking ceremony event to much fanfare.
With both timeline commitments missed, on top of the potential for a downgrade in chip manufacturing technology in the second factory, the Chips Act is off track. The legislation passed Congress in 2022, setting aside tens of billions to boost U.S. chip manufacturing with the goal of bringing the country closer to self-sufficiency when it comes to building chips.
TSMC’s Arizona projects are a critical pillar to that domestic chipmaking independence.
Most Chips Act funds have not been distributed. In December, Intel
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CEO Pat Gelsinger
told Barron’s that he’s “anxious” about the timing of the disbursement of Chips Act funds.