By Wen-Yee Lee
TAIPEI (Reuters) – TSMC’s new U.S. factory is unlikely to receive the most advanced chip technology before factories in Taiwan because of complex compliance issues, local building codes and various permit requirements, the Taiwanese company’s chief executive said.
Taiwan Semiconductor Manufacturing Co CEO and President CC Wei said construction of the new plant in Arizona took at least twice as long as in Taiwan, in comments that detailed specific challenges for the US as it seeks to rebuild its domestic chipmaking sector.
“Each step requires a permit, and once the permit is approved, it takes at least twice as long as in Taiwan,” Wei said late Thursday at a National Taiwan University event. He added that it will therefore be difficult for TSMC to use its latest technology in the US before Taiwan.
TSMC, the dominant maker of advanced chips used by companies including Apple (NASDAQ: ) and Nvidia (NASDAQ: ), is spending $65 billion on three giant factories in the US state of Arizona.
TSMC said most of its chip production will remain in Taiwan, especially for the most advanced chips.
Wei said on Thursday’s earnings conference call that despite various challenges and cost overruns, he was confident the Arizona plant would produce chips of the same quality as Taiwan, and he expected a smooth ramp-up process.
At the university event, Wei said that a shortage of skilled workers and gaps in the supply chain, as well as a lack of regulations involving the construction of chip factories, have further extended the timeline for his Arizona project.
“We ended up establishing 18,000 rules, which cost us $35 million,” Wei said, noting that TSMC funded the hiring of a team of experts to work with the local government on regulatory issues.
He added that the cost of supplying chemicals in the US is five times higher than in Taiwan, which is why TSMC ships sulfuric acid from Taiwan to Los Angeles and then trucks it to Arizona.
Labor shortages also posed challenges, as TSMC brought half of its construction workers from Texas to Arizona, increasing relocation and housing costs, he said.
The US government has offered full support for the investment, including a $6.6 billion grant, as it seeks to spread the geographic risk of over-concentration of chip manufacturing in Asia, particularly Taiwan.
US Commerce Secretary Gina Raimondo said last week that TSMC had begun manufacturing advanced 4-nanometer chips for US customers in Arizona, a milestone in the Biden administration’s semiconductor efforts.
