(Reuters) - Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), the world’s biggest contract manufacturer of computer chips, is expected to announce plans to build an approximately $12 billion advanced chip factory in Arizona, according to people familiar with the matter.
The announcement, expected as soon as Thursday, coincides with an effort by the administration of President Donald Trump to bring more foreign manufacturing to the United States.
One of the sources said the plant will create as many as 1,600 jobs and produce the most sophisticated 5 nanometer chips. TSMC also has an older chip facility in Washington state.
TSMC did not immediately return a request for comment. The Wall Street Journal first reported TSMC’s plans.
The move comes after the Commerce Department drafted a rule that, if implemented, could severely restrict sales of chips by TSMC to blacklisted Chinese telecoms equipment maker Huawei, a key customer. One of the two sources, a Commerce Department official, said the decision to locate the plant in the United States generates “good will” at the department.
TSMC is a major supplier to Apple Inc (AAPL.O). The Taiwanese company makes the chips that power Apple’s iPhones, and the iPhone maker works closely with the chip manufacturer to become the first to take advantage of new advances in its chip-making processes.
Semiconductors play a key role in both consumer electronics and defense equipment. The vast majority of the most advanced chips are made in Asia, which has caused concern among U.S. officials as a strategic rivalry with China deepens over the origins of the deadly coronavirus.
While Intel Corp (INTC.O) has major manufacturing operations in the United States, it supplies only its own chips rather than making them for outside customers.
The Trump administration has been in talks with both Intel and TSMC to build a plant in the United States. One of the people said Intel would have been a problematic choice, because its customers would see Intel as both a supplier and a rival.
Last week, TSMC said it had been considering the United States as a location for a new factory but there was “no concrete plan yet.”
One of the sources said Commerce had spearheaded talks with TSMC over the potential plant over around two years.
Last week, Intel said it was in discussions with the Department of Defense about improving domestic sources for microelectronics and related technology.
The Department had been working with companies to bolster the supply chain for microprocessors, a person familiar with the matter said. The TSMC announcement is not expected to derail the Pentagon’s efforts, despite the Commerce Department’s working on the TSMC deal independently, the person said.
Apple and Intel declined to comment.
Reporting by Stephen Nellis in San Francisco, and Shepardson, Alexandra Alper and Mike Stone in Washington, Karen Freifeld in New York; Editing by Dan Grebler and Leslie Adler
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