TSMC Arizona Plant Operations Will Reportedly Cost 30% More Than Taiwan Sites

TSMC’s new semiconductor manufacturing plant in Phoenix, Arizona will begin mass production in early 2025, and its production costs will be about 30% higher than those at the Taiwan factory. The Arizona fab will begin producing 10,000 12-inch wafers per month using the 4 nm node, with plans to double production to full capacity of 20,000 wafers. Four major technology companies—apple, NVIDIA, AMDQualcomm – has pledged to purchase chips from the factory to meet its artificial intelligence and high-performance computing needs. The 445-hectare facility highlights the challenges the U.S. semiconductor industry continues to face. Although the plant aims to bolster domestic wafer manufacturing, materials must be imported from Taiwan to maintain production quality, exposing gaps in the U.S. semiconductor supply chain.

This reliance on overseas significantly increases operating costs. While TSMC’s investment marks an important step in rebuilding domestic production capacity, the huge cost difference between U.S. and Taiwanese production raises questions about long-term viability. TSMC has started trial production at the factory and plans to expand operations. The company’s second-stage factory has been completed, equipment is being installed, and future expansion aims to produce 2-nanometer wafers by 2028. Even competing with its own Taiwanese factories, customers may decide to use Taiwanese factories due to lower costs. Meanwhile, TSMC continues to expand its Taiwan operations and plans to build a new 2-nanometer fab in the Kaohsiung Science Park starting next year.