TSMC's Phoenix Fab 21 Expansion Strengthens U.S. Semiconductor Manufacturing

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Written by Jennis Jacob for IIR News Intelligence (Sugar Land, Texas)

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Summary

TMSC's ongoing manufacturing complex expansion in Phoenix, Arizona, is poised to boost domestic production of semiconductors.

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State of Semiconductor Demand

Recent years have witnessed significant volatility in the semiconductor industry, driven by supply-chain disruptions, escalating trade tensions, intensifying innovation competition, and a push toward semiconductor self-sufficiency. According to Semiconductor Equipment and Materials International (SEMI), the global front-end semiconductor fabrication capacity is projected to grow at a compound annual growth rate (CAGR) of 7% from yearend-2024 through 2028, reaching about 133.2 million wafers annually. It also forecasts a 69% growth in advanced chipmaking capacity backed by artificial intelligence (AI) through 2028. Against this backdrop of capacity expansions and shifting geopolitics, the U.S. continues to emerge as a key market focused on rebuilding domestic fabrication and lowering supply-chain risks.

TSMC's Arizona Semiconductor Manufacturing Complex

In tandem with advancements in semiconductor technology, Taiwan Semiconductor Manufacturing Company's (Hsinchu, Taiwan) Fab 21 campus in Phoenix, Arizona marked the first time in U.S. history when leading-edge chips were manufactured domestically at scale. In global terms, the Phoenix Fab 21 project is likely to strengthen the U.S. role as a completer and more reliable participant in the semiconductor ecosystem by pairing design leadership with some advanced manufacturing capacity. This expansion is driven by the U.S. CHIPS and Science Act of 2022. This is alongside TSMC's strategic initiative to diversify manufacturing beyond Taiwan while utilizing Arizona's existing tech ecosystem--such as Intel Corporation (Santa Clara, California) and Amkor (Tempe, Arizona).

According to Industrial Info's Global Market Intelligence (GMI), the first phase is already operational, producing 10,000 to 30,000 4nm (N4) wafers per month. Following the success of Phase 1, the project scaled up significantly, with overall investment rising from US$12 billion to US$165 billion to support phased expansion beyond the initial phase.

Currently, there is a total spending pipeline worth US$153 billion across six active capital-spending projects geared at the Phoenix Fab 21 plant expansion, according to Industrial Info's GMI Database. Phase 2 and Phase 3, with an investment of US$12 billion each, are under construction. Phase 2 targets volume production of 3-Nanometer (N3) chips by 2028, while Phase 3 is aimed at producing 2-Nanometer (N2) chips and A16 process technologies by the end of the decade.

Furthermore, phases 4, 5, and 6 are in their initial planning phases with each holding a spend of more than US$9 billion. All three facilities are focused on manufacturing semiconductor components within an approximately 2 million-square-foot semiconductor fabrication plant.

A significant portion of the overall investment is going toward an expansion of the packaging facility, which is in its initial planning phase, scheduled to commence in the first quarter of 2028 and reach completion by the end of 2030.

Projects are progressing as planned, with no significant schedule slippage reported. While most of the spending will come to fruition by December 2030, the remaining would reach completion by August 2035. Subscribers to the GMI Industrial Manufacturing Project Database can see a full list of related project reports.

Key Takeaways

• Global front-end semiconductor fabrication capacity is projected to grow at a CAGR of 7% from yearend-2024 through 2028, according to Semiconductor Equipment and Materials International (SEMI).
• SEMI forecasts 69% growth in advanced chipmaking capacity backed by artificial intelligence (AI) through 2028.
• TSMC's Phoenix Fab 21's expansion investment reaches US$165 billion.
• Much of the overall investment is going toward an expansion of the packaging facility, which is in its initial planning phase, scheduled to begin in first-quarter 2028 and reach completion by the end of 2030.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).