The TSMC Arizona plant set to make chips for Apple has been one of the most high-profile results of political attempts to boost America’s chipmaking capabilities – but it is now coming under fresh scrutiny, according to a new report.
Some employees are said to consider the plant a potentially damaging distraction, which could place the company’s technological lead at risk. Others say it’s simply a bad business decision …
The Taiwanese Semiconductor Manufacturing Company (TSMC) announced back in 2020 that it would be building a $12B chipmaking plant in Arizona. Construction of the main chip facility was completed in August, with production scheduled to begin in 2024.
Apple helped lobby for subsidies for the plant within the CHIPS Act framework, but when it was revealed that the plant would use a 5nm process, this appeared to place it too far behind Apple’s curve for its A-series and M-series processors. A later report suggested that the plant would instead use a 4nm process, but this would still lag behind Apple’s reported plans to switch to 3nm a year before production is scheduled to start.
TSMC subsequently confirmed plans for an additional 3nm plant, but again Apple is expected to have moved onto 2nm processes by the time this one opens.
Bloomberg originally reported that the plants will make some chips for Apple, just not A-series and M-series processors, and probably not significant quantities of even legacy chips. However, Apple CEO Tim Cook later clarified that the plant will make A-series and M-series chips for older products, just not the latest ones.
TSMC Arizona plant under fresh scrutiny
The New York Times reports that there are growing doubts within the company about the wisdom of the project. TSMC currently has a strong technical lead over chipmaking rivals like Samsung and Intel, and there are concerns that this could be put at risk by taking key employees away from the company’s Taiwan base, impacting research and development work.
Internal doubts are mounting at the Taiwanese chip maker over its U.S. factory, according to interviews with 11 TSMC employees, who declined to be identified because they were not authorized to speak publicly. Many of the workers said the project could distract from the research and development focus that had long helped TSMC outmaneuver rivals. Some added that they were hesitant to move to the United States because of potential culture clashes.
Some TSMC engineers also doubted that American workers would fit the company’s work ethic, which frequently involves working late nights and weekends.
Additionally, analysts doubt the business sense of the move, saying that it might prove an expensive exercise in politicking.
“TSMC’s investment in the U.S. from a business perspective makes no sense at all,” said Kirk Yang, chairman of the private equity firm Kirkland Capital and a former tech analyst, citing lofty costs. He added that TSMC might have been forced to set up a factory in the United States because of political considerations, but “so far, the Phoenix project has yielded very little benefit for TSMC or Taiwan.”
The plant is already estimated to cost at least four times as much as the same plant in Taiwan, and the company’s CFO warned that the project might hit TSMC’s profitability in the short-term.
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