China claims Taiwan as part of its sovereignty; therefore, firms and authorities in the US have long been wary of becoming too reliant on the island nation for cutting-edge semiconductors.
Why? Because these sophisticated chips are produced mainly by Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor manufacturer.
Now, the largest city in Arizona would be the site of an initiative to mitigate that risk.
The Phoenix Hub
On Tuesday, Dec. 6, TSMC aims to reveal a $40 billion strategy to expand and modernize its Phoenix manufacturing base. At the busy building site, the firm wants to bring innovative manufacturing technologies from Taiwan, as The New York Times reported.
The upgrades enable TSMC's Phoenix facility to make iPhone circuits that can do 17 trillion specialized calculations per second.
TSMC intends to construct a second facility there with superior manufacturing techniques for future smartphones, PCs, and other smart gadgets.
A gathering on Tuesday, Dec. 6, to commemorate the expansion is scheduled to bring President Biden, Apple CEO Tim Cook, and other business and government leaders.
Advanced semiconductor factories, or "fabs," may produce hundreds of fingernail-sized chips on 12-inch silicon wafers. Some expensive and complex machines are already arriving in enormous crates for manufacture.
TSMC's revised $40 billion Arizona expenditure projection includes $12 billion pledged in 2020. The facility will provide 21,000 construction jobs and 4,500 permanent positions.
According to Bob LeFort, head of Infineon's US branch, a major German chip producer, TSMC's addition of more sophisticated manufacturing technologies in the US would assist solve vulnerabilities linked with the scarcity of semiconductors visible during the past years.
Aiming for More US Plants
The updated strategy shows how geopolitical worries are pushing firms and governments to adjust longstanding tactics, bucking historical patterns that drove companies to relocate most chip production to Asia.
It also highlights the growing significance of chips and new chip-making technologies, which provide computing capacity to consumer goods, autos, and military equipment like missiles and drones.
Former President Trump and current Biden administration officials want international and local chipmakers to construct additional plants in the US.
In July, Democrats and Republicans agreed on a $52 billion semiconductor subsidy program in the CHIPS and Science Act.
Chipmakers have announced big plant projects, including Intel in Ohio, Micron in New York, and Samsung in Texas.
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Support for Local Production
TSMC, the world's largest "foundry," possesses the most modern manufacturing technologies. Amazon, Qualcomm, Nvidia, and Advanced Micro Devices (AMD) are among its major clients.
These corporations have not raised concerns about chip production in Taiwan. Although, senior executives from numerous firms attended Tuesday's gathering, indicating significant support for manufacturing more crucial components domestically.
Analysts and industry insiders say TSMC's expansion in Phoenix suggests increasing customer demand.
Arizona state and municipal authorities have agreed to give financial incentives for TSMC's first development phase. The company will likely seek federal subsidies for both stages under the CHIPS Act.
