make 5 nanometer chips

TAIPEI –Taiwan Semiconductor Manufacturing Co. is considering building another advanced plant in the U.S., Nikkei Asia has learned, as the world’s biggest contract semiconductor supplier responds to Washington’s desire to bring more of the tech supply chain onto home turf.

The new plant would carry out chip packaging, using advanced technology to integrate different types of semiconductors onto wafers. Innovation in packaging chips is emerging as an industry battleground for TSMC and rivals including Intel and Samsung, and this would be TSMC’s first such facility outside Taiwan.

TSMC is already building its first U.S. chip manufacturing plant in more than two decades — a $12 billion facility in Arizona, to go into production by 2024. It will make 5 nanometer chips — currently the most advanced generation of semiconductors that are used in Apple’s latest iPhone and Mac processors.

TSMC faces pressure to add production capacity in the U.S., a market that accounted for 62% of its revenue, three people with knowledge of the matter said.

Washington is concerned about geopolitical risks arising from American reliance on chips made in Taiwan, the source of almost all global leading-edge semiconductor production. China views the democratically-governed island as part of its own territory and has not renounced the idea of taking it over by force.

In a report this week that highlighted the vulnerability of the U.S. supply chain, Washington warned that any disruption in Taiwan would risk a $500 billion loss in revenues for electronics makers who count on the island’s output. The report mentioned advanced chip testing and packaging specifically as potential risk areas, given U.S. dependence on Southeast Asia, Taiwan and China for these services.

Even before its Arizona plant is open, TSMC is already eyeing a potential expansion. While it is planned with a capacity of 20,000 wafers a month, this could rise to 120,000, sources briefed on the matter said. The company only has four factories with monthly capacity over 100,000 wafers, all of them in Taiwan.

“The most certain part is the initial capacity of 20,000 wafers per month. …TSMC surely has further expansion blueprints,” one of the sources told Nikkei Asia. “The company is cautious not to make commitments too early as there are a lot of uncertainties that need to be taken into consideration, including geopolitical factors.”

TSMC declined to comment on whether it plans to build a chip packaging plant in the U.S. but pointed to CEO C.C. Wei’s remarks in April, when he revealed the company had acquired a large piece of land and said that “further expansion is possible.”

The company further said that any additional capacity expansion would be in response to customer needs, and that it “is not under any pressure from Washington to further expand in the U.S.”

Chip packaging, which is also highly centralized in Asia, is an area where Washington wants more self-reliance. Once viewed as relatively unsophisticated, packaging is becoming more important and innovative as the pace of technological advances in chipmaking slows and chipmakers try to eke out more performance.

TSMC’s planned U.S. plant would involve its latest 3D stacking technologies to arrange chips with different functions in one package, sources told Nikkei Asia.

TSMC is also building an advanced chip packaging facility in the Taiwanese city of Miaoli that is set to go into production in 2022. Advanced Micro Devices and Google will be among the first customers, Nikkei Asia has reported.

With a market share of more than 50%, TSMC is the world’s leading contract chipmaker, making semiconductors for other chip developers including Apple, Qualcomm and Nvidia. It is also an important source of automotive chips for suppliers such as NXP, Renesas Electronics and Infineon, and supplies chips for U.S. F-35 fighter jets and supercomputers.

Su Tzu-yun, director of the Institute for National Defense Security Research, said semiconductors have been identified by the U.S. as strategic, sensitive resources and the country has been stepping up efforts to gain more control of them. “The Biden administration’s latest supply chain report is an extension of the former Donald Trump administration’s move to increase their control over sensitive technologies, which includes a call for bringing production onshore,” the defense tech analyst said.


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