Regardless of slowing semiconductor demand, notably on the excessive finish and for forefront nodes, Taiwan Semiconductor Manufacturing Co. (TSMC) plans to plow an extra $3.5 billion into its Arizona fab websites.

The elevated capital expenditures had been approved by the foundry large’s board of administrators introduced in a memo on Tuesday. The transfer comes simply months after TSMC practically tripled its funding in Arizona as a part of an growing push to broaden its amenities within the US.

TSMC’s Grand Canyon State campus, first introduced in mid-2020, was initially envisioned a $12 billion facility able to producing 20,000 silicon wafers a month based mostly on its then novel 5nm course of node. Situated simply outdoors of Phoenix — throughout city from Intel’s Ocotillo chip middle — the fab was anticipated to make use of roughly 1,600 folks when it got here on-line in 2024.

With $52 billion CHIPs funding for brand spanking new fab capability on the desk, TSMC in December stated it might build a second fab at its Arizona website and enhance its funding to roughly $40 billion. Mixed, the corporate says the 2 fabs will pump out 50,000 wafers a month as soon as they’re absolutely up and working.

The second fab, which is slated to come back on-line in 2026, will reportedly produce chips based mostly on the corporate’s new 3-nm course of node. Nonetheless, as we have noted previously, it is doubtless the location will produce far more superior chips by the point its lithography machines are powered on. Initially, the foundry operator’s first Arizona fab was to provide chips based mostly on its 5nm course of, however by 2022 TSMC stated the fab would use its 4nm course of tech as an alternative.

Demand is dropping, however for the way lengthy?

Within the practically three years because the TSMC website was first introduced, the semiconductor trade has undergone a radical transformation as a confluence of occasions, set off by the COVID-19 pandemic and sophisticated by rising tensions between the US and China, gave rise to a world semiconductor scarcity.

TSMC’s continued investments in fab infrastructure come within the face of deteriorating demand for chips, as the worldwide financial system contracts. We have already seen this play out within the PC and gaming markets the place spending on PCs, laptops, smartphones, GPUs have all however disappeared over the previous two quarters.

To this point, the world’s largest chip producer has managed to shrug off the financial headwinds, rising revenues 26.7 p.c year-on-year to $19.93 billion in This fall. Nonetheless, the corporate’s outlook is not practically so optimistic.

TSMC executives final month projected the corporate’s first income decline in practically 4 years. In response to the altering financial winds, the corporate has curbed its spending plans, from $40 billion to someplace between $32 and $36 billion.

TSMC is not the one foundry operator dealing with headwinds.Reuters reports that Samsung Electronics, the second largest foundry operator subsequent to TSMC, this week might want to borrow $16 billion from its show enterprise to make use of as operational funds.

The information comes after Samsung posted its weakest quarter in years. In This fall, the corporate noticed its working earnings plummet 69 p.c 12 months over 12 months to $3.4 billion. Executives blamed ballooning DRAM and NAND flash inventories which had been driving common promoting costs to new lows. Regardless of this the corporate shocked many by doubling down on its foundry enlargement, promising to spend money on excessive worth course of tech, like DDR5 and high-bandwidth reminiscence merchandise.

Samsung Electronics says it’ll pay again its show division with curiosity by 2025.

Whereas TSMC and Samsung proceed to spend money on their foundry companies, Intel is having bother discovering the money to pay for its new fabs. Final week, native media reported that Intel had approached the German financial system minister with a request for an extra €3.2 billion for the corporate’s Magdeburg mega fab on prime of the €6.8 billion the nation had already agreed to pay.

As a consequence of rising inflation and better gasoline costs, Intel now estimates the ability will price €20 billion to finish. ®


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