Taiwan Semiconductor Manufacturing Corporation (TSMC), the world’s biggest contract chipmaker, said it will build a $12 billion factory in Arizona, creating over 1,600 jobs and boosting the Trump administration’s efforts to reduce dependence on foreign-based supply chains of key technologies.
“The TSMC facility in Arizona will increase U.S. economic independence, bolster our safety and competitiveness, and strengthen our leadership in high-tech manufacturing,” said Secretary of State Mike Pompeo, in a statement.
The Taiwanese company, which at an estimated market capitalization of over $255 billion is the world’s most valuable semiconductor maker, said it intends to initiate the investment in 2021, and will be developing a state-of-the-art five-nanometer semiconductor fabrication foundry. The chips it makes can be used in high-end defense and communications devices.
“With TSMC’s commitment, high-tech chips will be Made in America once again—the nation where the semiconductor industry was invented,” Pompeo said.
“These chips will power everything from artificial intelligence to 5G base stations to F-35s,” he added.
Pompeo also said the deal strengthens bilateral relations with Taiwan, which he called “a vibrant democracy and force for good in the world.”
The Taiwanese chipmaker said the plan was to build the plant over nine years and that, when completed, it will be able to process up to 20,000 silicon wafers per month.
“This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem that enables leading U.S. companies to fabricate their cutting-edge semiconductor products within the United States,” TSMC said in a statement.
The move appears to be a win for the Trump administration’s efforts to wrestle global tech supply chains back from China.
It comes as President Donald Trump has stepped up criticism of the Chinese Communist Party’s (CCP) trade practices and Beijing’s handling of the outbreak of the CCP virus, the novel coronavirus that emerged in Wuhan and causes COVID-19.
Trump has long pledged to bring manufacturing back from overseas and now a steep economic slump brought on by the global pandemic is driving a government-wide push to end the practice of U.S. companies offshoring production to China and, more broadly, to reduce America’s foreign supply chain dependency.
“We have a supply chain where they’re made in all different parts of the world,” Trump said in an interview with Fox Business’ Maria Bartiromo that aired Thursday.
“And one little piece of the world goes bad and the whole thing is messed up,” Trump said, adding, “We should have them all in the United States.”
U.S. Secretary of Commerce Wilbur Ross touted the deal as “another indication that President Trump’s policy agenda has led to a renaissance in American manufacturing.”
TSMC is a major supplier to U.S. tech giants such as Apple and Qualcomm, as well as Chinese firms like Huawei. Washington has put Huawei, which has links to the CCP, on a trade blacklist over allegations that it poses a security threat, which the company denies.
Credit Suisse and JP Morgan analysts cited by Reuters believe that by announcing an investment in the United States, the Taiwanese chipmaker hopes the Trump administration might drop or delay plans to require an export license for semiconductors made by U.S.-designed chip-making technologies. The proposed new rule would let the Commerce Department block the sale of TSMC-made chips to Huawei, which accounts for around 14 percent of the Taiwanese company’s semiconductor sales.
“While it is hard to be certain, we believe that TSMC announcing a U.S. Fab could remove the threat of further Huawei restrictions in the very near-term at least,” JP Morgan analysts said.
Eric Sayers, an Asia security expert and adjunct senior fellow at the Center for a New American Security think-tank, told the Financial Times that TSMC’s decision highlights the company’s intention to support the development of an advanced, U.S.-based microelectronic ecosystem.
“Remaining the leader in this industry will be critical to future economic and military competitiveness,” he told the publication. “At a geopolitical level, I can’t think of a better big idea for tying the US and Taiwan together than working to ensure the free world stays the leader.”
Reuters contributed to this report.