Taipei: Taiwan Semiconductor Manufacturing Co. (TSMC) is accelerating the construction of its second and third wafer fabs in Arizona, with the aim of establishing a global gigafab cluster in the U.S. state. Speaking at an investor conference, TSMC Chairman C.C. Wei highlighted Arizona’s strategic role in providing sophisticated chips for smartphones, AI applications, and high-performance computing devices.
According to Focus Taiwan, the first fab in Arizona commenced mass production in the fourth quarter of last year, utilizing the advanced 4-nanometer process. The yield rate was comparable to TSMC’s facilities in Taiwan. The second fab’s construction has been completed, and it will deploy the more advanced 3nm process, which TSMC has recently begun mass-producing in Taiwan. TSMC is expediting production at the Arizona site ahead of schedule to satisfy strong client demand.
TSMC has also initiated construction on a third fab that will employ the 2nm process and A16 process, addressing robust demand for AI-related chips. The three fabs represent a US$65 billion investment, with TSMC pledging an additional US$100 billion over the coming years to establish three more fabs, two IC assembly plants, and a research and development center in Arizona. These investments aim to position Arizona as an independent semiconductor cluster in the U.S. market, contributing 30 percent of TSMC’s advanced production capabilities.
Beyond the U.S., TSMC is expanding in Japan and Germany. The first fab in Kumamoto, Japan, began production at the end of 2024, using mature 12nm, 16nm, and 28nm process technologies. While the second fab in Kumamoto faced slight delays due to local traffic concerns, construction is expected to start later this year, contingent on the city’s infrastructure progress. In Dresden, Germany, TSMC is developing a fab with specialty technologies, progressing well according to plan.
In Taiwan, TSMC plans to build 11 wafer fabs and four advanced IC assembly plants in the coming years. Current projects in Hsinchu and Kaohsiung are set to start mass production later this year using 2nm technology. TSMC Chief Financial Officer Wendell Huang noted that overseas investments might initially dilute the company’s gross margin by 2-3 percentage points, increasing to 3-4 percentage points over five years.