TSMC has successfully achieved production yields at its Fab 21 Arizona facility similar to those at its fabs in Taiwan, reportsBloomberg. This signals that the company’s major U.S. project is on course, despite earlier issues and delays. The fab, initially set to start full production in 2024, was pushed to 2025 due to a shortage of skilled labor, yet it looks like there will be no more setbacks for the chip production facility.
TSMC’s Fab 21 near Phoenix, Arizona began trial production in April 2024 using N4 (4nm-class) process technology. Production yields are now on par with those from TSMC’s Tainan facility in southern Taiwan, according to Bloomberg. Yield rate is a crucial factor in profitability, and the company is performing well despite the challenges of operating overseas.
While TSMC does not publicly disclose its specific yield rates, the company has consistently maintained a long-term gross margin of 53% or higher and a net profit above 36% over the past four years. Investors are monitoring the company’s ability to maintain these margins, especially as it expands production outside of Taiwan: in the U.S., Japan, and Germany.
The delay in full production, initially planned for 2024, was due to a lack ofskilled workers in Arizona, according to TSMC. Meanwhile, Intel, which also has fabs in Arizona, never complained about the lack of skilled workforce in the state. TSMC’s comments have raised concerns about whether TSMC can match the efficiency of its Taiwanese operations in the U.S. However, the company has expressed confidence that the Arizona project is progressing as planned without disclosing its yields.
TSMC is a key supplier for major tech companies like Apple, AMD, Intel, and Nvidia. Making processors for these companies in the U.S. will enable them to diversify their supply chain and ensure that crucial chips are made domestically. TSMC’s ability to replicate its strong yield rates and profitability in the Arizona fab is important both for the contract chipmaker and its customers in the U.S.
To support TSMC’s expansion in America, the U.S. government is providing significant financial backing to the foundry. TSMC will receive $6.6 billion in grants and up to $5 billion in loans to aid its $65 billion investment in its Arizona campus that will house three phases of Fab 21.
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Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
