Taiwan’s dominance in semiconductor manufacturing has long raised concerns over the availability of this critical resource. Now, high-quality chips are finally being manufactured domestically, and the production is looking to scale even further.

But is it just a token facility, or are we looking at future production at scale? Let’s find out. 

The CHIPS Act

The CHIPS Act was rolled out in 2022 to encourage domestic semiconductor manufacturing. TSMC was the first company to take up the offer, announcing a world-class fab in Phoenix, Arizona.

Many were skeptical about the promise, but TSMC came through, investing billions to set up multiple fabs with its latest 4nm and 3nm processes. Other companies like Amkor and SPIL are collaborating to handle the other parts of the semiconductor supply chain, such as the packaging and testing of the chips.

Mass Production Has Started

As of now, the plant has already entered mass production, making processors for companies like AMD and Apple. These include the new Blackwell architecture-based AI chips, poised to power AI data centers in the US.

And contrary to expectations, the yields of the Arizona fab are on par with TSMC’s plants in Taiwan, proving that semiconductor infrastructure can be established here as well. The success of this measure has led TMSC to announce a further expansion of the plant’s capabilities, with more fabs to be set up and production to be ramped up.

Will These Fabs Make PC Chips?

Simply being able to make semiconductors isn’t enough. The technology gets more miniaturized by the day, and unless a fab can produce the latest generation, its chips can’t compete with the market.

The initial fabs in TSMC’s Phoenix factory were for the 4 nm process, which is a bit outdated at this point. But soon after, a 3 nm fab was also set up, and now a 2 nm fab is also in the works.

The 2 nm process is what the upcoming CPU architectures are going to use. Intel is working on its own 1.8 nm process (which it is calling 18 A), AMD and Apple are likely to produce their chips in TSMC’s fabs.

But unlike before, the fabs used will be based in the US itself. While the capacity is still not enough to completely replace imports, this ensures we have some domestic production in case of supply chain disruptions.

Why Is TSMC Investing in US Fabs?

Taiwan’s semiconductor industry is rooted in the goal of making the island nation crucial to the global economy, creating an incentive for the USA to lend assistance against China. And this approach has worked well, giving Taiwan a shield against its belligerent neighbor.

But it has also raised concerns in the US about the complete reliance on a foreign country for such a critical resource. Especially as Taiwan is increasingly becoming a target for China, which is struggling to improve its own semiconductor manufacturing.

This means there is a strong push to make Taiwan share the technology and invest in US fabs, deepening its partnership while also making it less of a strategic target to China. And the new plants are still owned by TSMC, so it isn’t a loss of revenue for them either.

What About the Workforce?

Initially, there were concerns about the workforce that would be hired to work these fabs, as only TSMC’s existing employees in Taiwan are familiar with the processes. But these issues were addressed by sending American engineers to train in Taiwan’s fabs, who have returned to bring their expertise to these new fabs.

Now, even more people are being hired to man the expanding facilities, creating even more jobs at every stage of the production line. And that’s before we mention the boost to the business of its partner companies handling other aspects of the supply chain.

Bright Future for Domestic Semiconductor Manufacturing

The investments being made by TSMC into America’s semiconductor manufacturing are paving the way for us to meet at least part of our needs domestically. Currently, it is estimated that 30% of TSMC’s US-bound chips will be made on-site in the Phoenix plant, which is a significant milestone.

Module by module, the company is aggressively expanding the scope of the facility. TSMC ultimately aims to transform it into a “GigaFab cluster” with the capability to mass produce semiconductor wafers at a large scale.

And Intel is investing in its own new facilities in Arizona and other states, leveraging the same CHIPS Act grants. The coming years are looking really bright for domestic chip manufacturing.