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TSMC investing $65 billion in factories in Arizona

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TSMC chief executive describes challenges of working in US

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US government has offered TSMC strong support

By Wen-Yee Lee

TAIPEI, Jan 17 (Reuters) - TSMC's new U.S. plant is

unlikely to get the most advanced chip technology before

factories in Taiwan due to complex compliance issues, local

construction regulations and various permitting requirements,

the Taiwanese company's CEO said.

Taiwan Semiconductor Manufacturing Co ( TSM ) CEO and Chairman C.C.

Wei said building the new factory in Arizona has taken at least

twice as long as in Taiwan, in comments detailing specific

challenges for the U.S. as it seeks to rebuild its domestic chip

manufacturing sector.

"Every step requires a permit, and after the permit is

approved, it takes at least twice as long as in Taiwan," Wei

said late on Thursday at a National Taiwan University event. He

added that it would therefore be hard for TSMC to use its latest

technology in the U.S. before Taiwan.

TSMC, the dominant maker of advanced chips used by companies

including Apple ( AAPL ) and Nvidia ( NVDA ), is spending $65

billion on three giant factories in the U.S state of Arizona.

TSMC has said most of its chip manufacturing would remain in

Taiwan, especially for the most advanced chips.

Wei said at an earnings conference on Thursday that,

despite various challenges and cost overruns, he was confident

the Arizona factory would produce the same quality of chips as

in Taiwan, and he expected a smooth ramp-up process.

At the university event, Wei said a shortage of skilled

workers and gaps in the supply chain, as well as a lack of

regulations involving chip plant construction, have further

extended the timeline for its Arizona project.

"We ended up establishing 18,000 rules, which cost us $35

million," Wei said, noting that TSMC funded the hiring of a team

of experts to work with the local government on regulatory

issues.

He added that chemical supply costs in the U.S. are five

times those in Taiwan, leading TSMC to ship sulphuric acid from

Taiwan to Los Angeles and then truck it to Arizona.

Labour shortages have also posed challenges, with TSMC

bringing half of the construction workers from Texas to Arizona,

increasing costs due to relocation and accommodation, he said.

The U.S. government has offered full-throated support for

the investment, including a $6.6 billion grant, as it seeks to

spread geographic risk from an over-concentration of chip

manufacturing in Asia, particularly Taiwan.

U.S. Commerce Secretary Gina Raimondo said last week that

TSMC had begun producing advanced 4-nanometer chips for U.S.

customers in Arizona, a milestone in the Biden administration's

semiconductor efforts.