U.S. government pressures TSMC’s capacity expansion plan in China fab

About three months ago, Jiangxi Hantang System, a supplier of TSMC, learned of the timetable for its investment of $12 billion to build a new fab in Arizona, USA. It is understood that TSMC will finalize the contract for the cleanroom and EUV lithography machine this month, and the equipment installation work is expected to start in September next year. This fab is expected to start production in 2024, using a 5nm process node, with a production capacity of 20,000 wafers per month. Recently, there are rumors that TSMC will consider building a few more fabs in the future to increase production capacity in the United States.

On the other hand, TSMC has also decided to expand its wafer fabs in China to respond to customer needs. TSMC currently has two wafer fabs in mainland China, one is located in Shanghai and the other is located in Nanjing. This front-end Semiconductor Manufacturing Company announced an investment of $2.89 billion to expand the Nanjing fab and increase the production capacity of the 28nm process production line. It is expected to be put into production in the second half of 2022, and the target production capacity of 40,000 wafers per month will be reached by the middle of 2023.

According to DigiTimes, a person familiar with the matter revealed that TSMC is currently facing pressure from the United States to reconsider its expansion plan in China. The U.S. government is concerned that TSMC’s expansion project in Nanjing’s fab will help China to promote self-sufficiency in semiconductor manufacturing, and therefore hopes that TSMC can refuse to provide cutting-edge silicon manufacturing technology to China. There is also news that TSMC’s fab project in the United States is not included in its long-term roadmap for overseas production capacity. The reason is that the relevant project must be similar to the operating cost of TSMC’s fab in Taiwan, while the operating cost of the fab in the US is too high.