iPhone chip maker TSMC to invest $40 billion for its upcoming factories in Arizona

Taiwan semiconductor manufacturing company (TSMC) has announced that it will invest $40 billion in its two upcoming semiconductor factories in Arizona. The first facility is expected to be fully operational in 2024 while the second will be ready in 2026. 

TSMC chairman Mark Liu made the announcement on December 6 at an event in Arizona in the presence of US President Joe Biden and Apple CEO Tim Cook. An initial investment of $12 billion was also announced at the event. 

TSMC accounts for 55% of the global chip supply. Apple procures the majority of its chips from TSMC’s Taiwan plants. This is expected to change once the Arizona facilities are operational. “The opening of TSMC's plant in Arizona marks a new era of advanced manufacturing in the US — and we are proud to become the site’s largest customer,” Cook tweeted on December 6. 

This is the first time in a decade that Apple would be using chips made in the US.

Earlier in November, during a company internal meeting at the Germany office (as part of his Europe tour), Cook had indicated that the company would be diversifying its supply chain to different parts of the world, as opposed to its current heavy reliance on Taiwan for chip manufacturing. 

Taiwan-based iPhone maker Foxconn announced in February this year that it is partnering with Indian conglomerate Vedanta to manufacture semiconductor chips in India. Foxconn is investing $118.7 million to set up a joint venture with Vedanta, which will be the majority shareholder.

The US government has announced several steps to boost local chip production. In August, President Biden signed the CHIPS and Science Act of 2022 into law. It provides about $280 billion of funds (over ten years) towards the progress of domestic manufacturing, research, and development of semiconductors in the US. Apart from incentivizing companies to build semiconductor factories in the country, the act also has a provision for barring organizations (which receive federal funding under the CHIPS act) from building similar facilities in China for the next ten years. This act will bolster chip production in the US and in the long term also benefit markets like India. 

Last year the Indian government announced a ₹76,000 crore production-linked incentive (PLI) scheme for developing semiconductors and display manufacturing ecosystems in the country and cutting reliance on imports. In September 2022, the government further tweaked the PLI scheme to offer 50% of the project costs across different categories of factories. Three consortia have been finalized by the Centre for the incentives – Foxconn-Vedanta, International Semiconductor Consortium (ISMC), a joint venture between UAE's Next Orbit Ventures and Israel's Tower Semiconductor), and Singapore's IGSS Ventures.

ISMC will soon open a $3 billion semiconductor fab in Karnataka, to manufacture 40-65 nanometre analog chips for the defence and auto sectors.