
Chip maker TSMC scores subsidies, picks site for US$12 billion US plant
- TSMC’s decision to build a plant in Arizona came after White House officials warned about the threat inherent in having much of the world’s electronics made outside the US
- The Taiwanese company is the main contract chip manufacturer to Apple and Huawei Technologies
Taiwan Semiconductor Manufacturing Co (TSMC) has secured government subsidies for its envisioned US$12 billion chip plant in Arizona, moving closer towards finalising a fabrication facility designed to allay national security concerns and shift hi-tech manufacturing to America.
TSMC announced the project just before Washington levelled new restrictions on the sale of chips to Huawei, seeking to contain one of the Taiwanese company’s largest customers.

The Taipei-based chip maker has set aside land near its selected plot and hopes to convince its own suppliers to set up operations in the vicinity over time, Liu said. They would join the likes of Intel Corp and Micron Technologies, which already operate facilities in the western state and have helped build a vibrant local semiconductor industry over the years. The scope of any eventual subsidies would require blessing from the US Congress, Liu added.
“Subsidies will be a key factor in TSMC’s decision to set up a fab in the US,” he said. “We are still talking to the US government. Our request is that the state and federal governments together make up for the cost gap between the US and Taiwan.”
TSMC is embarking on its US endeavour during one of the most turbulent years in memory, with the coronavirus pandemic depressing the global economy and smartphone demand that top clients Apple and Huawei depend on for growth.
The Taiwanese company, which in April trimmed its 2020 sales outlook, also finds itself in the crossfire as the Trump administration ratchets up a campaign to contain China. Washington last month barred any chip maker using American equipment from supplying Huawei without US approval, effectively blocking the Chinese telecommunications equipment maker’s access to semiconductor manufacturing and dealing a blow to TSMC’s business.
If there are no more HiSilicon orders, our other customers will want to fill the gap in our capacity
But Liu reaffirmed TSMC’s projections for 2020, saying it still planned to spend as much as US$16 billion this year on capacity upgrades and technology, and foresees a mid- to high-teens percentage rise in 2020 revenue.
Shareholders “can rest assured that we will resolve these new restrictions one by one. We will find a solution to continue to grow and secure more profits for our shareholders,” Liu said at Tuesday’s annual general meeting. “If there are no more HiSilicon orders, our other customers will want to fill the gap in our capacity, market share, or smartphone market share left by Huawei,” he said. “How fast they can fill that gap depends.”
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Washington’s curbs – a more precise strike against Huawei because it targets its secretive and cutting-edge HiSilicon chip design division – threaten to wreak havoc throughout the complex semiconductor ecosystem that produces technology for consumers and companies globally.
As the world’s largest and most advanced maker of chips for other companies, TSMC plays a crucial role in the production of devices from smartphones and laptops to servers running the internet. Huawei is TSMC’s largest customer after Apple and accounts for about 14 per cent of the Taiwanese chip maker’s sales, according to data compiled by Bloomberg. The Taiwanese firm may now have to cut off Huawei unless it gets waivers from the US Commerce Department. But additional business from existing clients like Apple, Qualcomm, MediaTek or Advanced Micro Devices could help offset a decline in orders.

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For TSMC, it is growing ever more difficult to remain neutral amid the growing tensions between the US and China. The company brands itself “everybody’s foundry”, effectively the Switzerland of the tech industry – something executives reiterated on Tuesday. It supplies not just Chinese customers like Huawei but also the American military, while relying on US producers of semiconductor manufacturing equipment like Applied Materials and Lam Research Corp.
“New restrictions can lead to a rebalancing among market players,” Liu told reporters. Huawei “will not be able to make smartphones in the future without semiconductors, and other smartphone brands will eat into its market share”.
“We will still have a high market share after the rebalancing,” he said.
