TSMC’s Arizona Factory Produces Better Yield Than Semiconductor Plants in Taiwan

TSMC, the world’s largest semiconductor manufacturer, has achieved better yield in its new Arizona factory than its Taiwan facilities.

Taiwanese giant TSMC’s new chipset manufacturing unit in the US has overtaken its domestic plants in terms of yield—a key metric in semiconductor production. The update from TSMC’s newly commenced plant in Phoenix, Arizona is good news for the American semiconductor industry as the federal government is looking to boost local chip production to cut its dependence on Chinese supply chains.

TSMC does not explicitly publish yield rates publicly, except sometimes in earning calls. However, the president of its US division, Rick Cassidy, revealed some details at a webinar where he was discussing the company’s contribution to the semiconductor industry, one of the listeners told Bloomberg.

According to Cassidy, yield at TSMC’s Arizona plant is at least four percentage points higher than other plants of equivalent capacity in Taiwan. Yield defines the amount of functional chipsets that can be produced per wafer, and is, therefore, a vital indicator of profitability. In addition to TSMC, the development will benefit almost all of its American clients, including Nvidia, Apple, Qualcomm, etc. Last month, TSMC started catering to Apple’s chip requirements by producing 4nm chips for iPads, among other products.

The higher yield also indicates the plant is on track to achieve its goals of full-volume production by mid next year. After starting production in April, TSMC’s Arizona plant matched production yield on par with the facilities in Taiwan, despite news about disharmony between Taiwanese and American workers, which had previously led to delays.

In a bid to cut ties with Chinese manufacturers and remain protected from geopolitical tension between China and Taiwan, the US government is incentivizing chip manufacturers. This includes previously pledging $6.6 billion in grants and another $5 billion in loans under the CHIPS Act to aid TSMC’s Arizona facility that will have three fabrication sites (or fabs) and is expected to cost $65 billion.

A third of these fabs will be equipped to produce chips at a 2-nanometer scale, something which its Taiwanese factories are slated to start in 2025. While the current facility produces chips on a 4nm process, TSMC previously estimated production of 2nm chips in Arizona will begin by the end of the decade, while the second fab is expected to start by 2028.