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Posted May 17, 2022, 9:36 PM
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Join Date: Jan 2010
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TSMC Projet much larger than Initially panned
https://azbex.com/planning-developme...smc-expansion/
Quote:
The Taiwan Semiconductor Manufacturing Company site in north Phoenix could become home to a massive fabrication campus of up to six phases with more than 2MSF per phase, according to global and technology industry press reports and recent statements by a senior TSMC Arizona official.
With Phase I development well underway and crane counts on the site exceeding 20, at times, TSMC has quietly launched construction of Phase II.
This follows reports last year that the project valuation went up from the originally estimated $12B to $35B.
The investment increase stems largely from TSMC’s increasing production shift from five nanometer wafers to 3nm wafers and the associated outfitting of production facilities to handle the new product type, according to various semiconductor news outlets.
Phase I consists of nearly 3.6MSF of total built space, including a 2.88MSF factory – also known as the “Fab” – and supporting buildings. Phase II, aka Fab 2, is planned for another 2.88MSF.
For comparison, the two semiconductor fabs under construction by Intel in Chandler are smaller than TSMC’s Phase I development.
At last week’s BEX Private Development Summit, TSMC Arizona Sr. VP Brian Harrison gave a brief project update that surprised some attendees by disclosing Phase II is currently under construction.
The far greater surprise came, however, when Harrison detailed what could be 10-to-12 continuous years of construction and development at the 1,140-acre north Phoenix facility.
TSMC has trademarked what it refers to as the GIGAFAB® Model, a development approach in which the company develops giant campuses to concentrate manufacturing in centralized areas.
In its 2021 annual report, TSMC explains its GIGAFAB approach by saying: “The GIGAFAB facilities are coordinated by a centralized management system known as super manufacturing platform (SMP) to provide customers with consistent quality and reliability, improved flexibility to cope with demand fluctuations, faster yield learning and time-to-volume production, as well as lower-cost product requalification.”
From a capacity perspective, TSMC’s output is 3.5 times as large as the next largest provider. The company currently has four GIGAFAB sites around the world. Harrison showed a slide of a GIGAFAB facility in Taiwan with eight phases, each of which is roughly as large as the Phase I development in Phoenix. As a condition of Harrison’s appearance at the Summit, attendees were prohibited from taking pictures of the presentation, and BEX Companies was asked not to publish or otherwise share slides or imagery.
In his update at the Summit, Harrison confirmed TSMC Arizona has the potential to be developed as a GIGAFAB site with up to six phases, with each phase being approximately as large as the fabs in Phases I and II. If all six are eventually built to that scale, it would equal fabrication space of more than 17.25MSF.
The News Isn’t Really New
While Harrison’s statement caught many in the room by surprise, the news that TSMC is considering Arizona as a GIGAFAB location has actually been making the rounds for more than a year.
The first reference we could find was in a since-removed article in the Taiwanese newspaper United Daily News in March of 2021. That announcement, along with an overview of the semiconductor shortage and resulting spike in capacity demand, was picked up by the electronics industry publications Electronics Weekly and Electronics 360. By May of last year, the story had been picked up by several outlets, ranging from tech innovation-centric publications like Next Big Future all the way to global news wire service Reuters.
The Current State of Entitlement and Development
Because of the volume of coverage TSMC has received, many people have forgotten – or may have never realized – the project is one part of a greater master plan known as the Sonoran Oasis Science and Technology Park, a “large scale planned unit development of 3,500 acres of desert in north Phoenix for a major future employment corridor that would include a tech campus and mixed-use component,” according to the DATABEX project description.
Other projects under the Sonoran Oasis master plan include:
The Mack Innovation Park master plan,
2 TSMC supplier sites, and
The Northwest Valley Transportation Project, which will construct three miles of full arterial streets to serve TSMC’s needs.
In addition, according to TSMC’s 2021 annual report, the development agreement with the City of Phoenix features $250M in total infrastructure development.
Zoning and land use allocations for TSMC fall under the Sonoran Oasis PUD. It is worth noting that Sonoran Oasis is not the only major planned corridor in the area. As of last June, the City of Phoenix and State of Arizona were also working on a strategic plan for a space to the west of the site, bounded by AZ-74, Loop 303 and Lake Pleasant Parkway.
Last August, DATABEX Research staff submitted a public records request to the City of Phoenix for all documents related to developments at TSMC. In late September, the City responded with a project fact sheet dated August 31st. In supplying the fact sheet, the Phoenix spokesperson wrote, “It contains all of the public information that can be disclosed. There is no other information that the city can provide.”
Plan and permit request activity has been heavy since November and have largely followed the items listed in the Phoenix fact sheet. To date, nine items have been filed and are in various stages of issuance:
Preliminary Plan Review, Phases I and II (11/4/21),
Grading and Drainage Plan Review, Phases III and IV (1/19/22)
Stormwater Pollution Prevention Plan Review, Phases III and IV (1/19/22)
Mass Grading Permit, Phases III and IV (2/3/22)
Building Permit, Phase I (2/25/22)
Phase II Lorry Building Foundation (3/24/22)
Bulk Specialty Gas System Foundation Plan Review (3/24/22)
TSMC Warehouse Plan Review (3/24/22)
Landscape and Irrigation Plan Review, Phase II (4/18/22)
It should be noted the Phase III and IV reviews are merely to show how infrastructure will fit into the overall project and projects in adjacent areas and should not be taken to construe development plans for GIGAFAB or additional phase construction.
The State of Chip Supply and Demand
After peaking in 1979, U.S. manufacturing began an erratic decline across all sectors, including technology. According to the Semiconductor Industry Association, the U.S. share of global semiconductor manufacturing in 2021 was just 12%, down from 37% in 1990.
The increasing prevalence of semiconductor-dependent products, coupled with global supply chain constraints and the slow return to capacity following pandemic-related shutdowns, has led to a worldwide shortage in semiconductor output, impacting prices and availability for everything from cars to home appliances.
Adding to a drive for U.S.-produced semiconductors are ongoing fears about destabilization in the U.S.’ relationship with China, which has been steadily increasing its share of global production over the last five years.
To counter these issues, the Biden Administration issued an executive order in February 2021 that established a 100-day review of supply chains for semiconductor chips and other high-tech components and products. As a related step, Congress passed the CHIPS for America Act as part of the Fiscal Year 2021 National Defense Authorization Act. Now, the provisions of the CHIPS Act must be funded and an investment tax credit must be passed.
According to a status report from SIA, “The U.S. Senate on June 8, 2021 took a significant step toward this goal by passing broad competitiveness legislation called the U.S. Innovation and Competition Act (USICA) (S.1260), which includes $52B in federal investments for the domestic semiconductor research, design, and manufacturing provisions in the CHIPS Act. The House of Representatives followed suit, passing competitiveness legislation called the America COMPETES Act, which also includes $52B in CHIPS Act investments, on February 4, 2022. Now the House and Senate must reach agreement on joint competitiveness legislation containing CHIPS Act investments that can be passed by both chambers and signed into law by President Biden.”
The conference process is expected to get underway in the summer.
In the same update, SIA also notes, “Congress is also considering legislation called the FABS Act that would establish a semiconductor investment tax credit. The FABS Act should include expenditures for both manufacturing and design to help strengthen the entire semiconductor ecosystem.
“By funding the CHIPS Act and expanding and enacting the FABS Act, leaders in Washington can usher in a historic resurgence of chip manufacturing in America, strengthen our country’s most critical industries, boost domestic chip research and design, and help ensure the U.S. leads in the crucial, chip-enabled technologies that will define America’s strength for decades to come.”
Several factors from all the above could help push TSMC toward executing the GIGAFAB model in Phoenix:
Chip supplies remain constrained with no immediate relief on the horizon;
Even though TSMC Arizona is a subsidiary of a foreign-owned manufacturer, the CHIPS Act does not prohibit investment and incentivization for foreign companies;
TSMC already has the land in hand, and supplier firms are flocking to Arizona to serve its materials and supplies requirements;
The City of Phoenix is committed to up to $250M in infrastructure development, and Memoranda of Understanding are in place between the Arizona Commerce Authority and Taiwan’s Bureau of Foreign Trade, Ministry of Economic Affairs, and between the Greater Phoenix Economic Development Council and the Taiwan-USA Industrial Cooperation Promotion Office to work together to promote growth and cooperation at all levels;
Talks last year between TSMC and officials in Europe concerning expanding the company’s footprint in the European Union were unproductive. While the company has not ruled out the possibility for a European expansion, Reuters quoted TSMC officials as saying there were no current plans in place. Given the European technology market’s demand for older-style chips, focus on more European Union-centric investment and the current state of affairs in the Russia-Ukraine War, the likelihood of expansion in Europe seems dim.
The State of TSMC Expansion
TSMC’s current expansion efforts can be described as measured, but aggressive. In the Operational Risks section of its 2021 annual report, the company said:
TSMC performs long-term market demand forecasting for its products and services to manage its overall capacity. Based on its market demand forecasts, the Company has continued to add capacity to meet market needs for its products and services, including in Taiwan, in Nanjing, China, in Arizona, U.S., and in Kumamoto, Japan.
Implementing these capacity expansion plans will increase its costs, and the increases may be substantial. For example, the Company would need to build new facilities, purchase additional equipment and hire and train personnel to operate the new equipment. If TSMC does not increase its net revenue accordingly, its financial performance may be adversely affected by these increased costs.
In addition, market conditions are dynamic and TSMC’s market demand forecast may change significantly at any time. During periods of decreased demand, certain manufacturing lines or tools in some of the Company’s manufacturing facilities may be suspended or shut down temporarily. However, if demand subsequently increases rapidly over a short period of time, TSMC may not be able to restore the capacity in a timely manner to take advantage of the upturn. In such circumstances, its financial performance and competitiveness may be adversely affected.
In order to mitigate the risk associated with capacity expansion, TSMC continuously watches for changes in market conditions and works closely with its customers. When market demand is not as expected, the Company tries to adjust its capacity plans in a timely manner to reduce the impact on its financial performance.
The State of TSMC Arizona
It cannot be stated emphatically enough that the six-phase GIGAFAB outcome is merely a possibility at the moment. Its potential is precisely that: Potential.
Reached by telephone, Phoenix Community and Economic Development Department Director Christine Mackay said, “I’ve not seen a site plan submittal that shows the ultimate buildout of the campus, but we’re very hopeful that if things go right in Phoenix, that if the company finds what they’re looking for and all of the markets align… that they will continue to build on this campus.”
Any number of factors could prevent the development from coming to its highest fruition. As far back as 2019, when TSMC and other major chip producers announced significant expansion plans totaling more than $146B, some analysts worried about the possibility of overshooting demand and producing a supply glut.
While events since then have reduced that possibility, many other factors – including legislative/regulatory changes, demand changes for chip types, corporate operations/policy shifts, and a host of others – could keep TSMC Arizona at its smaller, but still massive, target scale.
Add to that the fact that TSMC’s global leadership is not keen on producing in the U.S. versus Taiwan and other areas, largely because workers are perceived to be of lower skill and dedication outside Taiwan. In May of last year, trade publication ExtremeTech quoted TSMC Founder, Chairperson and CEO Morris Chang as saying, “In the United States, the level of professional dedication is no match to that in Taiwan, at least for engineers.” Part of the now-removed United Daily News article, as reported by Electronics360, said TSMC will offer salaries to Taiwan-based employees to encourage and facilitate their relocation to Arizona.
Chang also sounded dismissive of possible U.S. incentive programs like the CHIPS Act and FABS Act, saying, “Short-term subsidy can’t make up for long-term operational disadvantage.”
Here’s what we can definitely say about TSMC Arizona today:
The first two phases of the north Phoenix campus are under construction;
TSMC has increased its planned investment in production in Arizona from approximately $12B to approximately $35B and is advancing plans to produce its most current product line here;
As of year-end 2021, TSMC had already invested more than $726M in its Arizona facility, according to the company’s 2021 annual report. (NOTE: U.S. dollar figure is converted from a reported amount of NT$21,643,300,000 in New Taiwan Dollars, based on May 13, 2022 exchange rate data.)
In his presentation to the more than 200 attendees of the BEX Private Development Summit, Harrison stressed the potential for the full GIGAFAB development will be wholly contingent upon the facility’s performance. Still, he reiterated many of the points noted above and confirmed some timelines.
Harrison confirmed Phase I expects to begin production in 2024 and Phase II is under construction. Teasing the potential future of development, he said, “We bought 1,140 acres. We know the business model of TSMC is to build these GIGAFABs. There are four of them in Taiwan. The fifth one is breaking ground soon. We didn’t buy that land (in Phoenix) to build one factory. We’re actually building a second that we didn’t announce. So, this is what’s possible.”
He continued, “There’s easily room to do, and there’s an architect’s site plan, that has six. That’s what’s possible here if we earn the right with our performance. This is an unprecedented, unique opportunity in the U.S.”
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And a large Supplier chemical factory going up nearby: https://www.bizjournals.com/phoenix/...t-phoenix.html
Quote:
Major industrial gas company Linde PLC (NYSE: LIN) is planning to invest $600 million for a plant to support the massive Taiwan Semiconductor Manufacturing Co. facility in Phoenix.
Last fall, the company announced it had signed a long-term deal with TSMC for the supply of industrial gases to the $12 billion manufacturing facility in north Phoenix generally located on the southwest corner of 43rd Avenue and Dove Valley Road.
The company presented its initial plans to the city of Phoenix as "Project Sparkling Expansion Project" in January 2020 and said its first plants and supporting infrastructure are expected to start in the second half of 2022.
Linde said it will build, own and operate a complex of on-site plants to supply ultra-high-purity nitrogen, oxygen and argon to TSMC.
"These plants are designed to meet the most stringent requirements of the semiconductor industry while maintaining world-class reliability and operating efficiency," Linde said in a statement in September.
The city of Phoenix declined to comment on the project. Linde did not immediately respond to a request for comment. City documents listed Linde Inc. as the developer and Archicon Architecture & Interiors LC as the architect of the project.
According to APS, which recently worked to relocate three major sets of transmission lines for TSMC, the city of Phoenix is contributing $205 million for infrastructure improvements to the area, while the TSMC project is expected to result in a $38 billion economic output over the next 20 years.
Behind the deal
In January 2020, Linde Inc., the successor company to the 2019 merger of Praxair Inc. and Linde PLC, proposed its expansion into Arizona with a new facility to produce liquid and gaseous nitrogen, oxygen and argon and compressed dry air.
In an application submitted to the city of Phoenix, Linde said it was proposing to install facilities producing multiple on-site production plants producing gaseous nitrogen, oxygen and argon, as well as simultaneously producing liquid nitrogen, oxygen and argon.
The process, according to Linde, requires few buildings and will total less than 20,000 square feet. While the project is capital and electricity intensive, it will only employ 14 plant employees and 14 truck drivers, documents from 2020 said.
The gas products will be supplied to the TSMC factory, while the liquid products will be distributed via truck to the Phoenix metro market customers and nearby states, project documents obtained by the Business Journal said. Linde's customers include hospitals, food processors, electronics, primary metals, energy, chemicals and aerospace industries, among others.
Gas products are immediately sent to pipelines and onto TSMC, while the liquid product will be stored in two to three large storage tanks depending on the product, documents said. In addition, Linde said the produced liquid products will periodically be pumped from the storage tanks and fed through atmospheric vaporizers to convert liquid to gas.
The company said it anticipates building two air separation plants, which includes a distillation tower that's about 15 feet in diameter and reaches a maximum height of 120 feet for one plant and 165 feet for the other. The air separation process, which separates nitrogen, oxygen and argon by cooling them down, "is the most electricity intensive process known to man," documents said.
"We consume 25 times the amount of electricity of a normal industrial customer and are often one of the top 20 customers of the associated electric utility," documents added.
Other features that support TSMC's factory outside of the gas plant include approximately 8,000 feet of pipelines installed in a pipe trench, 11,500 feet of underground 230-kilovolt transmission duct bank and filtration and purification equipment installed and owned by Linde on the second floor of TSMC's CUP building, documents said.
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) and it was amazing. I moved around for college and young life for a good chunk of time in Tempe and Central Phoenix, and now I'm back in this area. I'm excited for the growth and I'm glad I have a piece of this place if it really takes off like you mention. However, without trying to sound cheesy - I long for how it was when I was a kid, essentially a rural community surrounded by the desert. I guess I'm aging and a NIMBY (not exactly).
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