The Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly asking vendors to delay deliveries of major equipment to its facility in Arizona. This comes after TSMC delayed the opening of its Arizona chip facility until 2025, and amid reports the company will not manufacture complete semiconductors in the United States.
TSMC is asking manufacturers of high-end semiconductor equipment to hold off on deliveries to its Phoenix facility, according to a report released Friday by Reuters. The Taiwanese semiconductor giant is reportedly concerned about decreasing costs, and is “increasingly concerned” about cooling consumer demand, though the company referred to the report as a “market rumor” in a statement to Reuters.
Still, the outlet reported the delay in equipment arriving in Arizona is expected to be “short-term,” and the CEO of one vendor that works with TSMC acknowledged “several reports” of delays “not only in Arizona” but “also in Taiwan.”
Shares for TSMC were down 2.4 percent on Friday after the news broke, according to MarketWatch, with the report causing a ripple effect across the industry.
In July, TSMC changed its financial guidance for the year to project a 10 percent decline in revenue for 2023, according to Barron’s, attributing the slide to “worse-than-expected deterioration in demand” for semiconductors outside of the nascent artificial intelligence market.
It was reported earlier this week that TSMC will not finish its semiconductors at the Arizona facility, and will instead ship incomplete products to Taiwan for final “packaging” before they are sold to electronics manufacturers in the West. Sources claim the sophisticated equipment necessary to finish semiconductors is only available on the island. One expert concluded “it does not seem likely” for TSMC to invest in this type of equipment “in the desert in Arizona.”
Microchip is a general term for semiconductor components, and semiconductor refers to components widely used in most modern electronics, including smartphones, vehicles, and computers.
Before these headlines broke, TSMC had already announced a delay that will prevent the chip factory from beginning production until 2025, blaming a lack of skilled workforce in Arizona. Shortly after, an Arizona union sounded the alarm when TSMC asked to import nearly 500 Taiwanese nationals to complete its factory.
The negative headlines about TSMC did not stop the Biden campaign from boasting of its efforts to increase domestic semiconductor production in a 16-week advertising campaign that began on Labor Day. In the ad, a narrator specifically credits “the laws that [President] Joe Biden got passed” for new semiconductor factories built in Arizona, ostensibly referring to the TSMC facility.
In 2021, the TSMC factory was considered a key part of Arizona’s plan to add 700,000 new jobs in the state by 2030.
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