iPhone chip maker TSMC begins construction of major plant in Arizona

With the success of the iPhone 12, TSMC is going all-in on the future of chips.

What you need to know

  • TSMC is investing heavily in advancing chip production.
  • It is also beginning to build a production plant in Arizona.

As reported by Bloomberg, TSMC is investing up to $28 billion in advanced processing technologies and constructing a new plant in Arizona. Some analysts predict that Intel may outsource its chip production and tap the chip manufacturer.

The sheer scale of TSMC’s envisioned budget — more than half its projected revenue for the year — underscores TSMC’s determination to maintain its dominance and supply its biggest American clients from Apple Inc. to Qualcomm Inc. At 52% of projected 2021 revenue, the chipmaker’s planned spending would be the sixth-highest among all companies with a value of more than $10 billion, according to data compiled by Bloomberg. The outlay may also ramp up pressure on Intel, whose budget for 2020 was roughly $14.5 billion.

The company saw revenue climb to a new record in the December quarter, powered by the success of the iPhone 12 lineup.

Net income in the quarter ended December climbed 23% to NT$142.8 billion ($5.1 billion), compared with the NT$137.2 billion average of analyst estimates, the chipmaker said Thursday. That contributed to a 50% increase in full-year profit, the speediest rate of expansion since 2010. Sales in the December quarter climbed 14% to a record NT$361.5 billion, according to previously disclosed monthly numbers, helped in part by robust demand for Apple’s new 5G iPhones.

The launch of the A14 processor and its 5nm process propelled TSMC’s 5-nanometer business to 20% of total revenue, doubling the business since the last quarter.

The fourth-quarter results revealed increasing contributions from TSMC’s most-advanced 5-nanometer process technology — used to make Apple’s A14 chips. That accounted for about 20% of total revenue during the quarter, more than doubling its share from the previous three months, while 7nm represented 29%. By business segment, TSMC’s smartphone business contributed about 51% to revenue, while high-performance computing (HPC) was at 31%.

The plant in Arizona, when it is completed in 2024, aims to start with 20,000 wafers per month and expand from there.

Construction on a planned $12 billion plant in the southwestern U.S. state of Arizona will begin this year, executives reiterated, without specifying how much of the planned budget for this year will be allocated to the project. The factory will be completed by 2024, with initial target output of 20,000 wafers per month, though the company envisions having a “mega scale production site” over the long term, Chairman Mark Liu said.