TSMC's U.S. Expansion Faces Delays as Packaging Stays in Taiwan

TSMC USA Arizona Factory/yonhap news

Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading semiconductor foundry, is facing delays in its U.S. expansion plans as it struggles to finalize a location for its advanced packaging plants, according to reports from Taiwanese media including the Liberty Times. The company had announced its intention to establish these plants in the U.S. as part of a significant expansion effort.

Despite having started mass production of 4-nanometer wafers at its Phoenix, Arizona plant last year, TSMC will continue to conduct packaging operations in Taiwan. The company has not yet determined the sites for the two advanced packaging facilities that were announced at the White House in March, as it continues to evaluate potential locations.

The Arizona site, covering 445 hectares, is set to house six factories. However, due to spatial constraints, the two advanced packaging plants and a research and development center will need to be constructed elsewhere. TSMC's challenges are compounded by supply chain shortages, which necessitate that advanced packaging still be conducted in Taiwan despite an MOU with Amkor Technology to provide local testing services.

Earlier this year, TSMC committed an additional $100 billion to expand its U.S. facilities, building on a prior $65 billion investment plan. The ultimate goal is to establish six wafer manufacturing plants and two advanced packaging plants stateside. However, the company is grappling with high production costs, an incomplete supply chain, and a need for skilled local personnel.

Additionally, TSMC's production at its Phoenix plant remains limited, with the 21 fab P1 producing only 15,000 wafers per month. The second plant, P2, is expected to be even smaller, raising concerns about the pace of expansion. While Apple, currently the largest customer of the Phoenix fab, has slowed its orders, Nvidia is increasing its demand for AI chips, positioning it to become the largest customer by the year's end.

As TSMC navigates these hurdles, the semiconductor giant's U.S. ambitions remain a work in progress, underscoring the complex dynamics of global semiconductor manufacturing.