On Friday, Taiwan Semiconductor Manufacturing Co Ltd announced it will build a $12 billion chip factory in Arizona with the company saying it reflects a “strong partnership” with the U.S. government.
The development coincides with the Trump Administration’s efforts to bring in more manufacturing activity to the United States.
The chip factory will create 1,600 jobs and produce the most sophisticated 5 nanometer chips, said TSMC in a statement. The Taiwanese company already has a chip manufacturing facility in Washington state.
Construction for the plant will begin in 2021 and it will have a capacity of 20,000 silicon wafers per month. Each wafer can contain thousands of individual chips.
“This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem that enables leading U.S. companies to fabricate their cutting-edge semiconductor products within the United States…,” said TSMC while calling it a “strong partnership with the U.S. administration”.
With the news reaching the market, TSMC’s shares, rose by 1.5% on Friday monring, outperforming a 0.8% rise in Taiwan’s main stock market.
TSMC is the world’s most valuable semiconductor company and has a market capitalization of $255 billion.
The development comes in the wake of the U.S. Commerce Department drafting a rule that, which when implemented will severely restrict the sale of TSMC’s chips to blacklisted companies, including China’s Huawei.
According to a Commerce Department source, the decision to build a chip making factory in the U.S. has generated “good will” at the department.
TSMC makes the chips that power Apple’s iPhones. Apple has worked closely with chipmakers so as to marry its software with the hardware.
Semiconductors have played a leading role in both consumer electronics as well as defense equipment.
Incidentally, last week Intel had said it was in discussions with the Department of Defense on improving domestic sources for microelectronics and related technology. The DoD is working closely with companies to bolster the supply chain for microprocessors, said a source familiar with the matter at hand.