TSMC's US plant won't get the very best chip technology as it'll stay exclusive to the Far East… for now

Be it complex compliance issues, local construction regulations or permitting requirements of all sorts – of all the above, or more – but the new TSMC plant in the US is unlikely to pack the most groundbreaking chip technology. First, such advanced technologies will be tested at home in Taiwan, disclosed TSMC CEO.

C.C. Wei, the CEO and Chairman of TSMC, highlighted the challenges of establishing a new factory in Arizona, noting that the process has taken at least twice as long as similar projects in Taiwan, Reuters reports.

Speaking at a National Taiwan University event, Wei explained that every step of the construction process required permits, and once approved, the timeline significantly exceeded that of Taiwan. He expressed doubt about whether TSMC could deploy its latest technology in the US before doing so in Taiwan.

TSMC, as you know, supplies companies like Apple and Nvidia with top-shelf silicon. TSMC is investing $65 billion in three massive facilities in Arizona. Despite this expansion, the company has reaffirmed that most of its chip production, especially for its cutting-edge technologies, will remain centered in Taiwan.

Wei addressed these issues during an earnings conference, acknowledging cost overruns and other obstacles but maintaining confidence that the Arizona factory would produce chips of the same quality as those made in Taiwan. He anticipated a smooth production ramp-up once operations began.

At the university event, Wei elaborated on specific hurdles, including a lack of skilled labor, supply chain inefficiencies, and the absence of clear regulations for constructing chip plants in the US. To address regulatory challenges, TSMC created 18,000 compliance rules at a cost of $35 million, funding a specialized team to collaborate with local authorities.

Wei also pointed out the higher operational costs in the US, particularly for chemical supplies, which are five times more expensive than in Taiwan. For example, TSMC has had to ship sulfuric acid from Taiwan to Los Angeles and then transport it by truck to Arizona.

Labor shortages have compounded these difficulties, with TSMC relocating half of its construction workforce from Texas to Arizona, further increasing expenses due to relocation and housing.