By Jeff Gifford – Digital Editor, Phoenix Business Journal

May 14, 2020

The world’s largest contract silicon chip manufacturer will spend about $12 billion on a massive advanced semiconductor factory in Phoenix, bringing more than 1,600 jobs to Arizona.

Arizona Gov. Doug Ducey announced the news on Thursday evening, confirming earlier reports in the Wall Street Journal and other news outlets, that Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM), which makes silicon chips for Apple and several other major technology companies, is evaluating several sites in Phoenix for the factory.

TSMC has been working this week with the Trump administration on a deal for the plant as part of a White House effort to bring manufacturing jobs to the U.S. and reduce reliance on foreign sources for components sensitive to national security interests.

“TSMC could have picked any place in the world to build this advanced manufacturing factory,” Ducey said. “They chose Arizona for our unbeatable business climate, already thriving tech sector and ready access to an international supply chain.”

Ducey said the $12 billion will be spent between 2021 and 2029.

In a statement, the Arizona Commerce Authority said it will continue working with TSMC, the U.S. administration, the city of Phoenix and the Greater Phoenix Economic Council to finalize all aspects of the project.

The deal will bolster the region’s semiconductor industry, which has been slowly been bleeding jobs as more manufacturing has taken place offshore. Ducey said the project will generate thousands of additional jobs in the state for suppliers and other companies within the semiconductor industry.

The WSJ said the company’s board decided on the plant earlier this week. Production could begin by late 2023. It will be the company’s second factory in the U.S. Its other chip facility is in Washington State, according to Reuters.

Most of TSMC’s factories are in Taiwan. The company’s clients include Qualcomm Inc., Nvidia Corp., Advanced Micro Devices Inc. and Huawei Technologies Co., according to a report by Bloomberg.

Bloomberg noted TSMC spent $17 billion on a similar factory in Taiwan and plans to spend $16 billion on capital projects this year. The company on May 12 approved $5.704 billion for capital appropriations, for purposes including factory construction, according to a regulatory filing.

TSMC also today reported in a regulatory filing its first quarter revenue was $10.39 billion.

A new factory in Arizona will address concerns, long-held in the U.S., about the dominant role Asia plays in the production of components vital to American defense and consumer needs.

It also will bring a bigger player to the region that includes the likes of Intel Corp. (Nasdaq: INTC), with its Chandler campus employing about 11,000 people as well as ON Semiconductor Corp. (Nasdaq: ON) and Microchip Technology Inc. (Nasaq: MCHP)

Microchip, with about 2,000 Valley employees, has been bulking up, although mainly through acquisitions rather than organic growth. The Chandler chipmaker purchased Microsemi Corp. in 2018 for $10.8 billion.

Intel is putting work into finishing its Fab 42, a roughly $7 billion expansion of the company’s Chandler campus that will be responsible for the company’s leading edge of chip making.

Cupertino, California-based Apple is one of TSMC’s biggest customers, manufacturing chips for all iPhone models. Apple has stated it plans to move away from Intel chips in its desktop and laptop models to its in-house A-series chips that currently drive its mobile devices. An Arizona facility could be one source for Apple, which has tried in the past to move more manufacturing to the U.S.