Taiwan Semiconductor Manufacturing’s (TSM) new Arizona semiconductor plant marks a historic milestone as the most advanced chip fabrication site in the U.S., with Apple (AAPL) set to be its largest customer. Interestingly, the plant was initially projected to cost $12 billion but ended up costing $20 billion, with full production now delayed until 2025, according to CNBC. Nevertheless, TSMC remains committed to its plan of investing $65 billion to build two additional fabs by the end of the decade.
The Arizona plant will produce advanced 4-nanometer chips at a rate of 20,000 wafers per month. This will help address concerns about U.S. reliance on overseas chip production as supply chain risks and geopolitical instability increase. However, there are still some challenges that TSM will face, such as worker shortages and infrastructure demands.
As a result, TSMC sent 600 U.S. engineers to Taiwan for training in order to overcome a skills gap. In addition, TSMC aims to recycle 65% of the 4.7 million gallons of water needed daily and has invested in renewable energy credits to offset its enormous power usage. Overall, the firm plans to hire 6,000 workers once all three fabs come online.
Will the CHIPS Act Get Canceled?
The CHIPS Act, a $52 billion initiative aimed at boosting domestic semiconductor manufacturing, has played a significant role in supporting TSMC’s expansion in the U.S. Weeks after President-elect Donald Trump expressed opposition to the Act, the U.S. Commerce Department finalized TSMC’s $6.6 billion allocation from the bipartisan bill. Although political uncertainty surrounding the Act’s remains, Commerce Secretary Gina Raimondo told CNBC in an interview that she doesn’t think Trump will cancel it.
Is TSM a Buy, Sell, or Hold?
Turning to Wall Street, TSM has a Strong Buy consensus rating based on five Buys assigned in the last three months. At $232.50, the average TSMC price target implies 16.7% upside potential. Shares of the company have gained more than 93% year-to-date.
Questions or Comments about the article? Write to editor@tipranks.com