TSMC and Arizona Discussing Advanced Chip Packaging Investment

Jane Lanhee Lee and Debby Wu, Bloomberg News

Signage outside the Taiwan Semiconductor Manufacturing Co. facility under construction in Phoenix, Arizona, US, on Tuesday, Dec. 6, 2022. TSMC today announced plans to boost its investment in the state to $40 billion and construct a second production facility, following major customers urging the Taiwanese chipmaker to build more advanced semiconductors in the US. , Bloomberg

(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. and Arizona authorities are talking about adding advanced chip packaging capacity to the company’s plants in the state, Governor Katie Hobbs said in Taipei on Tuesday.

Hobbs is part of a broader US delegation visiting the island, with discussions among officials and companies focused on Taiwan’s key role in the semiconductor supply chain. Under Secretary of Commerce Laurie E. Locascio said the US is talking to TSMC about research and development for the first time, in an effort to bring more of the world’s biggest contract chipmaker’s technology onshore.

Packaging has become a bottleneck in the fabrication of the most in-demand silicon today, Nvidia Corp.’s artificial intelligence accelerators, made by TSMC. The Hsinchu-based company has committed to expanding its packaging capacity in Taiwan, but expects supplies to be tight for another 18 months, Chairman Mark Liu said at Semicon earlier this month. At the same event, Cadence Design Systems Inc. Chief Executive Officer Anirudh Devgan said packaging will be the key battleground for nations seeking to establish tech leadership.

US Commerce Secretary Gina Raimondo added to the chorus with comments at a house hearing in Washington on Tuesday, saying the US needs to have advanced packaging capacity.

“We would like to have multiple high-volume advanced packaging facilities in the US,” Raimondo said. “What I understand is coming to the end of Moore’s Law and chips can only get so small, which means all the special sauce is in the packaging and we have to have that in America, period.”

Read more: Chip Packaging Is the Next Battleground for Tech Lead, CEO Says

TSMC’s commitment to Arizona now spans two fabs and $40 billion in investment, and adding advanced packaging to that endeavor would again raise the ceiling on what’s possible to produce there. In December, TSMC said it would offer more advanced 4-nanometer chips from its Arizona plant, at the request of Apple Inc., one of its biggest customers.

Arizona and TSMC are “working through some bugs,” Hobbs said, but she is “very impressed by the speed with which it has been built” and the project continues on schedule. TSMC executives said at its last earnings call that operation of the first Arizona plant will be delayed to 2025 due to a lack of skilled labor.

Hobbs noted that more than 30 supply chain companies have come to Arizona in the past year. She said the state has a “highly skilled workforce” that’s continuing to grow. She added that Taiwan “needed to bring some more workers over, but there are 12,000 builders on this site every single day that are largely Arizonans. And they’re working side by side and learning those skills, those advanced skills so that we can grow that really advanced construction workforce as well.”

Read more: TSMC Delays Arizona Chip Output to 2025 on Worker Shortages

TSMC said in a statement that it was “honored” to host Hobbs at its headquarters where executives held “productive discussions” with her. “We believe the dialogues that we held during this visit will help us to work together even more closely in the future,” the company said.

(Updates with Gina Raimondo comment)