Despite tens of billions of dollars in direct funding given to semiconductor manufacturers in the U.S. to expand the regional chip supply chain, new reports indicate major foundries Taiwan Semiconductor Manufacturing Co. and Intel Corp. are facing issues with fab projects. Samsung Electronics already delayed its fab in 2023.
In a report from the Financial Times, outside of chip fabs, other projects are facing delays that range from as little as two months to several years. Some are even indefinitely postponed, the report said.
Why? A range of investment concerns are altering plans including:
- Worsening market conditions
- Slowing demand
- Uncertainties in domestic policies
The direct funding, coming from both the Inflation Reduction Act and the CHIPS and Science Act, is aimed at boosting semiconductor manufacturing domestically in the U.S. to increase the chip supply chain resiliency as well as protect national security interest.
TSMC
This week, TSMC approved $7.5 billion in funding for its wholly owned subsidiary, TSMC Arizona. The company originally planned just one fab before expanding it to not just two but three fabs at the Arizona location over the next few years.
TSMC was awarded $6.6 billion in direct funding through the CHIPS Act.
However, with production originally planned for this year, the first fab has yet to produce semiconductors. The second fab is scheduled to begin production in 2026. The third fab does not have a construction start date yet but reports have indicated it might commence production by the late 2030s.
Market research firm TrendForce reported this is due to several issues such as competition with resources with Intel (also with two fabs in Arizona) and cultural differences leading to production delays.
Intel
Intel said it will invest more than $100 billion over the next five years in new fabs across Arizona, Ohio, New Mexico and Oregon.
However, a report from the Wall Street Journal, found that Intel is delaying the Ohio fab due to market downturns and delays in U.S. subsidies.
Intel was awarded $8.8 billion in CHIPS Act funding for the fabs it plans to build.
The two Ohio fabs, where Intel said it would be spending $20 billion, initially were set to begin manufacturing in 2025. Now that date looks like it will be in 2026 with operations beginning the next year or even 2028.
Intel is also delaying its fab projects in Magdeburg, Germany. Initially set to start in the second half of 2023, Intel has postponed the start date to May 2025. It may also pause its investment plans in France and Italy, the report said.
Samsung
Meanwhile, Samsung has plans to build a cluster of semiconductor fabs in Taylor, Texas. That includes the first fab that began construction in 2022. It was initially scheduled to begin production this year. But back in 2023, the company delayed it to begin operations in 2026.
A report from local media My San Antonio said the delays were from a slowdown in the foundry market and delays in the disbursement of U.S. subsidies.
Samsung is slated to receive $6.4 billion in direct funding through the CHIPS Act.
The good news is that because of the delay, Samsung may upgrade the facility to advanced process technology at the 2 nm node, instead of the original 4 nm process technology.
