The bad news just keeps piling up for TSMC's beleaguered new facilities in the Arizona desert. The company previously announced production for its 4nm facility would be delayed by at least one year due to labor shortages. Now, its Chairman has announced its second facility will also be postponed to 2027 or 2028, which is grim news for the company's US expansion plans. The delays also mean the company might need to rethink the whole operation, given the timelines involved.
In an earnings call with investors, the company's top brass revised its estimates for its Arizona operations this week. Company executives said the company's second facility, which is being built to manufacture 3nm wafers, will be delayed one year, from 2026 to 2027 at the earliest. However, Chairman Mark Liu added a new ripple to the factory's destiny, saying that it might not be a 3nm facility after all, given the delays and the fact that funds from the CHIPS Act have yet to materialize. Chairman Liu's statements were flagged in a report from Bloomberg.
On the earnings call, Liu stated that the second facility's output will be determined by customer needs and government funding. Reading between the lines, it means if there are enough subsidies, it'll make cutting-edge wafers including 3nm or smaller, and if not, it'll be 4nm or thereabouts. “Our overseas decisions are based on customer needs and the necessary level of government subsidy, or support,” said Liu on the call.
Overall, it seems like the domino effect is taking place in Arizona, with delays at the first facility colliding with the second plant and causing it to fall behind schedule. In addition, CHIPS Act funds have been surprisingly slow to arrive. Even though the bill was signed into law in late 2022, the first disbursement occurred in December 2023, and it was only $35 million from the total of $52 billion that was earmarked. Major chipmakers, such as Intel, Samsung, and TSMC, have yet to receive funding from the act.
We'll have to wait and see if this apparent boondoggle ever gets back on course. The move by TSMC was seemingly designed to diversify its production pipeline to secure its future in case of a Chinese invasion of Taiwan, even though TSMC would never say as much in public. It would also allow customers like Apple to say it was using US-made silicon, which would be a first for the industry. Despite the marketing benefits of such a move, it's been reported that American-made chips would cost up to 30% more than those made in Taiwan due to higher labor and construction costs, meaning everything about TSMC's US operation is fraught with challenges.
