TAIPEI (Taiwan News) — At least five suppliers for Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel have pushed back plans for building plants in Arizona, Nikkei Asia reported on Tuesday (March 19).
Following investment announcements by TSMC and Intel to build new fabs in Arizona, chemical and material makers LCY Chemical, Chang Chun Group, Solvay, DPPC Advanced Chemicals (Kanto-PPC), and Topco Scientific made plans and purchased land to build factories in the state, the report noted.
However, the building of these plants has either been paused or scaled back, sources told Nikkei Asia. Some are only temporarily delayed, while others need further reviews with no timeframe for completion given.
Factors leading to the delays include rising labor and material costs, in addition to a shortage of construction workers, Nikkei Asia said. Suppliers added progress on TSMC and Intel projects has been slower than originally planned, which in turn has affected their plans.
Three semiconductor material executives told Nikkei Asia that construction costs in Arizona have ballooned to four or five times what they would be in Asia.
LCY Chemical, Chang Chun Group, Solvay, Kanto-PPC, and Topco Scientific have all bought land to construct facilities in Casa Grande, southeast of Phoenix, because the location is close to TSMC’s upcoming fabs in northwestern Phoenix and Intel’s plants in Chandler, according to Nikkei Asia.
One analyst told Nikkei Asia that materials companies do not want to build out too quickly before there is significant demand. Chip suppliers are either waiting for CHIPS and Science Act funding or holding off to see if industry demand picks up, the analyst added.
TSMC is investing US$40 billion (NT$1.28 trillion) to construct two Phoenix fabs. The first facility will produce 4 nm chips and is slated to begin commercial production in 2025, while the second fab has been delayed from 2026 to either 2027 or 2028, with the process technology manufactured dependent on the size of U.S. government incentives given.
