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Phoenix, Arizona — Taiwan Semiconductor Manufacturing Company (TSMC) is advancing its ambitious semiconductor wafer plant project in Phoenix, aiming to transform the city into a global semiconductor hub. One fab has already been completed and entered production, while two more are under construction. In the long term, TSMC plans to add three additional fabs and two advanced packaging facilities, with the goal of producing one‑third of its advanced chips in the United States.
The mega‑project spans 465 hectares and carries a staggering price tag of $165 billion (≈ RMB 1.2 trillion), making it one of the most expensive industrial projects worldwide. More than $40 billion in supplier investments are tied to chemicals, components, and engineering services.
Challenges in Phoenix
Unlike Taiwan, where rapid expansion is routine, TSMC has encountered multiple obstacles in Phoenix:
Regulatory complexity: U.S. projects face thousands of approvals across city, county, state, and federal levels.
Labor shortages and high costs: The U.S. lacks recent experience in building large domestic fabs (none since 2013), forcing reliance on external expertise. Two years ago, TSMC brought in over 500 Taiwanese technicians, sparking union backlash and complaints from American employees about exclusionary practices, language barriers, and safety concerns.
Water scarcity: Arizona’s limited water resources pose a long‑term challenge. TSMC pledged to build a wastewater treatment plant to recycle nearly all water used.
Community opposition: Local residents have voiced strong concerns about chemical hazards and water consumption. For example, ASE (Advanced Semiconductor Engineering) abandoned plans for a packaging and testing park after facing resistance.
Cost and Competitiveness
TSMC founder Morris Chang previously warned that building in the U.S. costs 50% more than in Taiwan, threatening global competitiveness. While strict U.S. regulations have reduced pollution and improved workplace safety, they also create bureaucratic hurdles. The National Environmental Policy Act (NEPA), for instance, often requires extensive paperwork without imposing substantive restrictions, slowing progress.
Policy Support and Local Advantages
The Biden administration’s CHIPS Act allocated over $52 billion in subsidies, with TSMC receiving $6.6 billion. Arizona state authorities and universities are actively recruiting companies and training engineers. Phoenix offers vast land and a climate with few natural disasters, but water scarcity remains a persistent risk.
Expert Analysis
Analysts note that Phoenix’s difficulties highlight the strong institutional support East Asian economies provide to semiconductor industries, while the U.S. has not fully restructured its system to accommodate chip manufacturing. The project underscores both America’s determination to localize advanced chip production and the steep challenges of replicating Taiwan’s semiconductor ecosystem abroad.
