PHOENIX, AZ: Leave the freeway and drive a few minutes through sand and cactus and you’ll find the future of advanced manufacturing.

Here, north of Phoenix, Taiwan Semiconductor Manufacturing Company (TSMC) is producing advanced micro processors for smart phones. The $7 billion plant is the first of a projected $65 billion, three fab (fabrication) investment expected to ultimately employ 12,000 workers.

[Image: Barry D Wood]

Gina Raimondo, commerce secretary in the Biden administration, was instrumental in bringing the TSMC to Arizona. The Taiwan-based company is receiving $6 billion of US taxpayer money from the 2022 Chips Act to boost US competitiveness in advanced manufacturing. Raimondo says the United States “is going to outcompete and win” in semiconductors.

Currently, contract manufacturer TSMC is the leader in semiconductors, producing 90% of the world’s most advanced computer chips. For strategic and political reasons, TSMC is diversifying from Taiwan, building new factories in Japan and Germany as well as the United States.

[Image: Barry D Wood]

Phoenix is a top destination for high-tech investment. Intel, a global leader in semiconductors four decades ago, employs 12,000 workers at three Phoenix area plants and is building two more. Netherlands-based NXP makes chips in suburban Chandler.

With seven million inhabitants, Arizona is the fastest-growing US state and Phoenix is the country’s fifth largest city. Regional deficits are unreliable water supply, sandstorms and blistering summer heat.

Bill Wiseman of the McKinsey consultancy worries that Arizona won’t find enough computer specialists to meet the demand for an additional 12,000 workers. Arizona State University in suburban Tempe is racing to address that shortage, turning out computer engineers. It graduated 7,500 engineers last year and has an engineering enrollment of 30,000.

TSMC Arizona plans to supply four nanometer processors for Apple iPhones. However, there have been delays and complaints from TSMC headquarters in Taiwan.

The $53 billion Chips Act was a centerpiece of the Biden administration’s effort to revive semiconductor production in the US. TSMC as well as Intel and Samsung are beneficiaries of Chips funding. South Korea’s Samsung is getting $6 billion for its chip factory near Austin, Texas, that is due to open in 2026. Intel is spending $20 billion on new foundries near Columbus, Ohio. However, there are doubts about Intel, as the money-losing company in December forced out its chief executive officer, Pat Gelsinger. 

Semiconductors and microprocessors are essential elements in artificial intelligence. They are integral to national defence, and critical to US efforts to retain its technological lead over China. 

Tufts University professor Chris Miller, author of the critically acclaimed book ‘Chip Wars’, says computer chips are a ”fundamental component of modern digital infrastructure and a key factor in the global balance of power.”

The TSMC factory in the Arizona desert is likely to be an important milestone determining the future of semiconductor manufacturing in the United States.

The views of the writer are not necessarily the views of the Daily Friend or the IRR.

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author

Washington writer Barry D. Wood for two decades was chief economics correspondent at Voice of America News, reporting from 25 G7/8, G20 summits. He is the Washington correspondent of RTHK, Hong Kong radio. Wood's earliest reporting included covering key events in South and southern Africa, among them the Portuguese withdrawal from Mozambique and Angola and the Soweto uprising in the mid-1970s. He is the author of the book Exploring New Europe, A Bicycle Journey, based his travels – by bicycle – through 14 countries of the former Soviet bloc after the fall of Russian communism. Read more of his work at econbarry.com. Watch https://www.youtube.com/watch?v=07OIjoanVGg