TSMC to invest more in the US while Japan and Europe plants encounter difficulties
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TSMC has had to make plenty of changes in light of the recent geopolitical situation and trading policies. We saw that the tech giant opened a manufacturing plant in Arizona to promote “Made in America” products and was overwhelmed with orders from big names like Apple, Nvidia, AMD, and more.
However, it turns out that the U.S. is demanding more production from the chip manufacturer and facing shortages and production delays in Europe and Japan, TSMC had to adjust its global investment strategy.
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Can TSMC keep up with the changing landscape?
The demand by the U.S. government for TSMC to deliver powerful chips has grown to the point where the company had to move up the completion dates for its newly built plant in Arizona by six months. This is because the domestic needs in AI, defense, and high-performing computing have drastically increased as the global race for AI domination is growing intense by the day.
Whether this will impact the supply chain and quality of the chips is yet to be seen, but a company like TSMC should be able to handle this amount of pressure. The original commitment of TSMC was for $65 billion in US manufacturing, but now it has been increased by $100 billion, totaling $165 billion.
This is a massive development, but the plan includes the development of three extra fabs, with two being advanced packaging facilities and a research center. These fabs are expected to be operational by 2030, meaning TSMC has 5 years to reach this goal.
While the prospect might be looking great in the U.S., the projects in Germany and Japan have experienced significant roadblocks. In Japan, Kumamoto, Fab 1 failed to reach its utilization levels due to labor shortages, conservative order forecasts from automotive and electronics clients, and traffic and infrastructure issues.
Over in Europe, the automobile production has dropped, meaning the demand for chips has also dropped, which in turn, impacts the overall milestones that need to be achieved. In addition, TSMC has joint ventures with Bosch, Infineon, and NXP but they are also facing product delays due to layoffs and the low demand and declining sales of engines.
However, TSMC has decided to brave the storm as its core is located in Taiwan, and as long as that is operational, they should power through these hardships. That being said, the resources can be smartly shifted from Japan and Germany to the U.S., as there is more investment and demand in that region, which might help cut some losses.
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