TSMC is considering building a 2nm chip fab in the US, with a focus on the US market?

For some time, the United States has continually restricted the development of Chinese enterprises under the name of "security", and Huawei's cutoff in supply is a typical example of this. In this crossfire between China and the U.S. technology industry, TSMC in Taiwan, China has also been widely affected. However, recent news pointed out that TSMC is stepping up its evaluation of the proposed plant in the United States in response to pressure from Washington.

According to the Nikkei Asian Review report, TSMC supplies chips for the US F-35 fighter jets, and also supplies to almost all chip makers such as Apple, Huawei, Qualcomm and NVIDIA. Therefore, the US government earlier suggested that TSMC produce chips in the United States for security reasons.

Two people familiar with the matter said recently that the foundry leader is actively considering setting up a factory in the United States. The new plant aims to be the world's most cutting-edge plant, producing more advanced semiconductors than the 5nm chips that will be used in this year's 5G iPhone.

The report pointed out that the proposal to set up factories in the United States shows that TSMC is trying to ease US concerns about its military chip supply chain. However, there are still many uncertainties in this proposal.

First of all, for TSMC, the cost of the United States will be much higher than Taiwan.

In response, a third person familiar with the matter said that it would not be possible to achieve the same high profits in the United States unless TSMC's U.S. customers and the state government help it bear the billions of dollars needed for the plant. However, it is understood that TSMC's latest 5nm chip factory in Taiwan will cost more than $ 24 billion (including R & D costs), which can be said to be extremely costly.

Second, geopolitics is also a factor of uncertainty.

For a long time, the US government has been worried about the risks of overseas production of military chips. Last year, the U.S. Department of Defense contacted several TSMC customers and warned that companies relying on Taiwan would pose security risks. Not only that, in the blockade of Huawei, the Trump administration further restricted the proportion of suppliers including TSMC using US technology.

In response to this, Su Ziyun, director of the Institute of Resources and Industry of the National Defense and Security Research Institute in Taiwan, said in an interview: "TSMC is facing a strategic choice whether to focus more on the US market or the Chinese market." In addition, Su Ziyun pointed out that the United States Worried about the possibility of any of its high-security chip design blueprints falling into China's hands.

However, a source familiar with TSMC's plans revealed that the company is considering producing 2nm chips in the United States.

It is reported that TSMC is seeking to produce 2nm chips in regions. People familiar with the matter noted that finding such a factory location in Taiwan, China, is difficult because Taiwan lacks land, electricity, and water, and is also facing increasing environmental problems. Therefore, "TSMC must seek overseas production and also need long-term planning beyond geopolitical factors."

At the same time, TSMC spokesman Nina Kao said on Monday, "TSMC has never ruled out the possibility of establishing or acquiring a fab in the United States, but there are no specific plans at this time," Nina Kao said it depends entirely on customer demand.

It should be noted that in 2019, the United States accounted for 60% of TSMC's US $ 34.6 billion in revenue, while the fastest-growing mainland China market contributed only 20%.