TSMC, the world’s leading foundry, has announced a delay in the deployment of its second fab in Arizona, citing uncertainties with demand and U.S. government decisions concerning subsidies. The company stated that the deployment of the fab will be delayed by at least a year compared to the initial schedule. Additionally, there are ambiguities about which nodes the factory would produce, raising questions about whether the Fab 21 phase 2 will make chips on its 3nm process technology or a different node.
During the company’s conference call with analysts and investors, outgoing chairman Mark Liu mentioned that the technology to be used in the second fab shell is still under discussion, and it depends on the incentives that the U.S. Government can provide. The current planning for the fab is projected for ’27 or ’28, a timeframe that has been extended due to uncertainties with subsidies and demand from clients.
When TSMC initially announced plans to increase investment in its Arizona site to $40 billion, it indicated that its Fab 21 phase 2 would be capable of making chips using its N3 family of process technologies and would come online in 2026. However, the delays in deployment have pushed the timeline to 2027 or even 2029, prompting the company to reconsider whether it needs to build a 3nm-capable fab at that time or opt for a more mature fabrication process.
Amidst the setbacks, TSMC has confirmed that its first advanced fab in the U.S., Fab 21, is on track for volume production of N4 in the first half of 2025. Despite the delay in the deployment of the second fab, the company remains committed to optimizing value for its overseas fab, aligning with customers’ demand in the respective area at the given timing.
The uncertainties with subsidies from the U.S. government under the CHIPS Act and client demand have led to the delay in the deployment of TSMC’s Arizona fab. The company’s decision to backtrack on its prior commitments and the extended timeline for deployment reflect the challenges it faces in navigating the complex landscape of technology investments and government support.
