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TSMC speeds up plan to expand, upgrade chip manufacturing technology in Arizona

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  Published in Science and Technology on Thursday, October 16th 2025 at 15:28 GMT by AZ Central
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TSMC Accelerates Arizona Chip Upgrade, Pushing U.S. Semiconductor Forward

In a decisive move that underscores the United States’ push to secure its semiconductor supply chain, Taiwan Semiconductor Manufacturing Company (TSMC) announced on Thursday that it will speed up its plan to upgrade chip‑manufacturing technology at its Arizona facility. The announcement follows a series of announcements by the company and state officials that TSMC will be building new, cutting‑edge fabs capable of producing 5‑nanometer (nm) and, eventually, 3‑nm chips—technologies that are critical for high‑performance computing, artificial intelligence, and next‑generation consumer electronics.

A New Milestone for Arizona’s Tech Landscape

TSMC’s Arizona plant, originally built in 2022 with a $1.5 billion investment, is the only 12‑inch wafer fab in the United States and has already started producing chips for companies such as Apple, Qualcomm, and Nvidia. The new upgrade plan, slated to begin construction in early 2025, will expand the site by adding a second, 12‑inch wafer line and a dedicated 5‑nm production line, with a view toward a future 3‑nm line. The expanded complex will occupy roughly 350,000 square feet, making it the largest semiconductor manufacturing site in the U.S. and the most advanced outside Asia.

According to TSMC officials, the upgraded site will feature state‑of‑the‑art cleanroom technology, including a 4‑nm ultra‑high vacuum (UHV) tool suite and a suite of advanced lithography systems that will allow the company to push the boundaries of Moore’s Law. The new fabs will also be designed with sustainability in mind; the company has pledged to use 90% renewable energy for the new site and to implement water‑recycling systems that reduce consumption by 30%.

“Arizona is a natural partner for TSMC’s U.S. strategy,” said TSMC’s Vice President of U.S. Operations, Li Wei. “Our commitment to expanding our presence here is driven by the state’s supportive policies, skilled workforce, and strong ecosystem of suppliers.”

State and Federal Incentives

Arizona’s Governor Katie Hobbs, who signed the bill in the state legislature that provides tax credits, incentives, and workforce training grants, said the upgrade would be a major boost for the state’s economy. “This expansion will create thousands of high‑wage jobs and position Arizona as a critical node in the global semiconductor supply chain,” Hobbs said in a statement.

Under the state package, TSMC will receive a 25‑year, 4% tax credit on the first $10 billion of capital investment, along with a 10% reduction in property taxes on the new site. In addition, the state will fund up to $200 million for a workforce development initiative that will partner with local community colleges to train technicians in advanced semiconductor manufacturing.

At the federal level, the upgrade is backed by the CHIPS and Science Act, which allocated $39 billion to support domestic semiconductor manufacturing. TSMC received a $1.5 billion federal grant to help offset the cost of the new fabs, and the company will also qualify for the federal manufacturing tax credit, which offers up to a 25% credit on eligible equipment purchases.

Jobs and Economic Impact

Industry analysts estimate that the upgraded Arizona plant will support 4,500 jobs—about 1,500 direct manufacturing positions and an additional 3,000 indirect jobs in the local economy. In addition, the new site will generate an estimated $7 billion in economic activity over the next decade.

“The creation of new manufacturing capacity is the most important component of ensuring supply‑chain resilience,” said Dr. Emily Zhao, an economist at the Arizona Institute for Technology. “The new fabs will help U.S. companies reduce dependence on overseas suppliers for critical components.”

TSMC is also working closely with the Arizona Department of Economic Security to develop a pipeline of skilled workers. The partnership will leverage the existing semiconductor courses offered by Arizona State University and the Phoenix Community College, which together train more than 2,000 students each year in microelectronics, cleanroom procedures, and process control.

A Strategic Move in Global Context

TSMC’s upgrade comes at a time of intense competition among semiconductor manufacturers. While Intel has announced its own U.S. fabs in Arizona and New Mexico, Samsung has announced plans to build a 3‑nm plant in Arizona as well. The U.S. government’s continued emphasis on domestic chip manufacturing is mirrored by China’s own ambitious “Made in China 2025” initiative, which seeks to establish a self‑sufficient semiconductor supply chain.

The new Arizona plant will also enable TSMC to supply critical chips for U.S. defense systems, including the next generation of F‑35 fighter jets and the Army’s hypersonic weapons program. According to a recent TSMC press release, the company will use its Arizona fabs to produce chips for the Department of Defense’s “Next Generation Radar” system, a critical element in modern air defense.

Looking Ahead

TSMC’s accelerated plan is expected to see the first 5‑nm line operational by the third quarter of 2026, with a 3‑nm line slated for completion by 2028. The company also plans to expand its supply chain within Arizona, bringing in key equipment suppliers such as ASML and Applied Materials, which will set up regional offices and support facilities.

The upgrade underscores the growing importance of advanced semiconductor manufacturing in the United States, and it positions Arizona as a central hub in the global semiconductor ecosystem. For TSMC, the move is a strategic bet that the U.S. will remain the world’s leading market for high‑performance chips, driven by the demand for AI, 5G, and automotive electronics.

In an era where the integrity of the semiconductor supply chain has become a national security priority, TSMC’s accelerated Arizona upgrade signals a decisive step toward a more resilient, technology‑enabled future.