During the 3Q23 Earning Call on October 19th, TSMC provided updates on its international factory construction. Notably, the new plant in Phoenix, Arizona, USA, is on track to commence production in the first half of 2025. The German facility is scheduled for production in 2027. The Kumamoto plant in Japan is making swift progress, with production expected to start by the end of 2024. TSMC remained silent regarding its plans following the announcement of discontinuing Phase 3 construction at the Longtan Park.

In line with its global expansion strategy, TSMC has established semiconductor fabrication plants in various locations, including Phoenix, USA, Dresden, Germany, and Kumamoto, Japan. In the recent update, TSMC shared details about these overseas projects. In the case of the new US facility, it has already hired nearly 1,100 local employees and aims to employ 4-nanometer (N4) technology by the first half of 2025.

As for the Dresden plant, TSMC announced the construction of a specialized semiconductor fabrication facility primarily catering to the automotive and industrial sectors, utilizing 22/28-nanometer and 12/16-nanometer technologies. Construction is set to begin in the latter half of 2024, with production slated to commence by the end of 2027.

The Kumamoto plant in Japan is making the most rapid progress. TSMC noted that this semiconductor fabrication facility will use 12/16-nanometer and 22/28-nanometer process technologies. Approximately 800 local employees have already been hired, and equipment for this plant began to be relocated this month. Production is expected to commence by the end of 2024.

Regarding the higher initial production costs at overseas plants, TSMC explained that these costs are higher than those at its Taiwanese semiconductor fabrication facilities. This is primarily due to the smaller scale of overseas semiconductor fabrication plants and the higher overall supply chain costs. In comparison to Taiwan’s mature semiconductor ecosystem, overseas semiconductor ecosystems are still in their early stages.

In addition, there has been significant attention on recent developments related to the Longtan Park Phase 3. However, TSMC made no mention of it in the press conference, only stating that they will continue to evaluate suitable construction locations.

Notably, TSMC recently received an extension waiver from the US Department of Commerce’s Bureau of Industry and Security (BIS) to continue operations in Nanjing, China. They are currently in the process of obtaining “Validated End-User (VEU)” authorization, with expectations of securing an indefinite exemption in the near future.

As reported by CNA, the Hsinchu Science Park Bureau(HSPB) is overseeing the expansion project for the Longtan Science Park in Taoyuan, which is essential for advanced manufacturing processes with nodes of 2 nanometers and below, a critical need for TSMC. The project has sparked social controversy, leading TSMC to withdraw its plan to establish a factory. In response, HSPB has indicated that several semiconductor companies are interested in developing in the vicinity of the Longtan Park.

The “Anti-Longtan Science Park Phase 3 Expansion Association” posted on Facebook that representatives from the HSPB, TSMC, and the association recently engaged in discussions. TSMC representatives expressed their unease about the significant social controversies surrounding the Longtan Science Park Phase 3 Expansion. They acknowledged the local residents’ attachment to their land and homes and have decided to abandon their original plan to set up a factory within the expansion project.

TSMC did not provide a direct response to the association’s post. In regard to the controversies surrounding the Longtan expansion project, TSMC stated that it is a tenant of the Science Park land. The park’s development is under the government’s purview, and they respect the residents and competent authorities, refraining from making further comments.

In response to the diverse opinions within the local community, HSPB announced its intention to adjust the expansion scope to ensure a win-win situation, balancing industrial development and the rights of the people. They plan to reevaluate the land requirements for the project, seeking and incorporating public opinions. The second public hearing, originally scheduled for October, will be postponed.

HSPB stressed that the expansion of the park aims to upgrade Taiwan’s industrial clusters, rather than merely serving the land needs of a single company. The establishment of the science park is intended to provide a high-quality industrial environment that encourages investment, the introduction of advanced technology industries, and scientific talent to enhance regional innovation capabilities, thus fostering research and innovation in the domestic industry.

The management bureau pointed out that both Hsinchu Park and Longtan Park have fully leased land. Considering the concentration of high-tech talent, mature industry clusters, convenient transportation, and adequate water and power supply infrastructure in Northern Taiwan, several semiconductor companies hope to continue their development in the vicinity of the Longtan Park.

To accommodate industrial development and future land use planning, the HSPB Bureau is planning the expansion of the Longtan Park, aiming to drive the transformation and upgrading of Taiwan’s industries.

(Image: sipa.gov.tw)

Having experienced in worldwide lockdown caused by COVID-19 and rising geopolitical worries in recent years, governments of various countries hope to have wafer manufacturing plants in their own territories to reduce the possible impact of supply chain disconnection; however, building and operating a semiconductor wafer manufacturing factory is not an easy task. In addition to the extremely high cost, high labor demand, and environmental conditions are also a threshold. Therefore, TSMC, the leader in foundries, has naturally become the target of active invitations by governments to set up factories. In addition to Japan,  after evaluating customer needs, cost, and environmental resources (including water, electricity, land) and other conditions, TSMC doesn’t rule out the possibility of setting up factories in other countries if it is cost-effective.

Japan, once the world’s largest semiconductor cluster, still occupies a very important position in some semiconductor equipment, raw materials and packaging materials, and technologies. TSMC has previously announced the establishment of a 3DIC material R&D center in Japan, and this time it announced the establishment of a wafer manufacturing plant. In addition to deepening the streamlined process of customer products from manufacturing to packaging, it can also cooperate closely with upstream equipment vendors, chemical raw materials factories, such as TEL, SCREEN, SUMCO, Shinetsu, etc.

（Image credit: TSMC）