TSMC delays Arizona factory that will eventually build chips for iPhones and AI

The world’s largest chipmaker is delaying the start of 4nm chip production at its new facility in Phoenix, Arizona, until 2025, blaming labor shortages. Apple has said it intends to eventually source chips for its iPhone and MacBook models from the Taiwan Semiconductor Manufacturing Company (TSMC) plant in the US, while Nvidia and AMD have also committed to using their production capacity.

The Phoenix-based chipmaker’s first factory, which broke ground in 2021, was originally slated to start producing 4nm chips next year. A second factory that will produce smaller, more complex 3nm chips is scheduled to open in 2026.

during the company Second Quarter Earnings Call On Thursday, TSMC Chairman Mark Liu said the company was “facing certain challenges, as there are not a sufficient number of skilled workers with the specialized experience required to install equipment in a semiconductor-grade facility” in the US (seen through The Wall Street Journal).

Liu added that TSMC plans to temporarily send technicians from Taiwan to train local workers at the new Arizona production facility. Nikkei Asia reported last month about a “task force” of more than 500 experienced workers on the way to help set up specialized equipment and also citing analysts who said slow progress is due to weaker market demand for TSMC’s chip production.

the chip maker Second Quarter Earnings Report It showed revenue (NT$480.8 billion or about $15.4 billion) down 10 percent and profit (NT$181.80 billion or $5.8 billion) down 23 percent from the same period last year, and its CEO Che Chia Wei projected a revenue drop of 10 percent for the full year amid falling demand for consumer electronics. “Inflation and higher interest rates impact final demand in all market segments, in all regions of the world,” Wei said. “While we have recently seen an increase in AI-related demand, it is not enough to offset the general cyclicality of our business.

The explosive popularity of generative AI models like OpenAI’s ChatGPT over the past year has resulted in increased demand for the advanced chips needed to run them. TSMC acknowledged that this has resulted in capacity shortages as it struggles to fill orders, but Wei remains optimistic that this will improve towards the end of next year. “We are working with customers in the short term to help them meet demand,” Wei said, adding that the company aims to double its capacity “as quickly as possible”.

Liu said TSMC is working with the US government to maximize the subsidies and tax credits available under the CHIPS Act to cover the first five years of higher manufacturing premiums in the US.

TSMC notes that 66 percent of its total net revenue for 2023 so far has come from customers based in North America, dwarfing competing markets like China (12 percent) and EMEA (Europe, the Middle East, and Africa, with a combined 7 percent). It’s no wonder the Biden administration is trying so hard to boost domestic semiconductor manufacturing, though the various issues holding up TSMC’s Arizona plant are a stark reminder that bringing that chipmaking capacity in-house is easier said than done.