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TSMC’s Arizona Chip Plant Delay Hurts Biden’s Manufacturing Push

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, has announced a delay in the construction of its second factory in Arizona. This setback not only affects the company’s plans but also poses a challenge to President Joe Biden’s efforts to boost American manufacturing.

Operational Date Pushed to 2027 or 2028

Initially expected to begin operations in 2026, the facility in north Phoenix is now projected to be operational in 2027 or 2028, according to TSMC Chairman Mark Liu. During an earnings call on Thursday, Liu mentioned an impending gap in the timeline.

Construction Underway, But Government Incentives Needed

While construction on the factory’s shell has commenced, TSMC emphasizes the need to review the incentives the U.S. government can provide. Liu mentioned ongoing discussions with U.S. officials, exploring options such as tax credits to facilitate the project.

Previous Setback and Biden’s Manufacturing Vision

TSMC’s Arizona Plans Hit Another Roadblock

This isn’t the first time TSMC has faced challenges with its Arizona expansion. Initially, in 2022, the company announced plans to build a second semiconductor plant in the state, raising its overall investment from $12 billion to $40 billion. However, last year, production at the first fab was delayed from 2024 to 2025 due to a shortage of skilled workers.

Biden’s Perspective on TSMC Investment

President Biden had previously lauded TSMC’s investment in Arizona as a positive sign for U.S. manufacturing. However, these delays pose a potential setback to the narrative of a resurgence in American manufacturing.

Potential Shift in Product Plans and Global Expansion

TSMC’s Rethinking and Global Expansion

TSMC might be reconsidering the type of products manufactured in its Arizona facility. Originally, plans included producing 4-nanometer and 3-nanometer chips in the first and second fabs, respectively. Liu indicated that the size of government incentives would influence the technology deployed.

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Overseas Expansion Amid Global Challenges

While TSMC has traditionally kept its most advanced manufacturing in Taiwan, it has expanded abroad due to commercial pressure and government encouragement. In addition to the Arizona facility, the company recently announced a factory in Dresden, Germany, and is building a facility in Japan, set to open next month.

Bright Outlook Amidst Global Challenges

Despite facing challenges in 2023 due to a weakening global economy, TSMC remains optimistic about the future. The company projects a 20% jump in revenue for 2024, citing the increasing emergence of generative AI-related applications as a driving force.

Share Performance and Global Presence

Following its earnings report, TSMC’s shares surged by 9.8% in New York and rose by 6.5% in Taipei. The company’s overseas expansions, including the upcoming facility in Japan, reflect its response to the current “fractured globalization environment,” according to Chairman Mark Liu.

In summary, TSMC’s delayed plans in Arizona not only impact the company’s expansion but also present challenges for the broader narrative of revitalizing American manufacturing. The global chipmaker remains resilient, adapting to a changing landscape and projecting a positive outlook for the future.

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