[News] Opening of TSMC Kumamoto Plant Nears, Yet Delay in Arizona Plant – Why is US Semiconductor Fab Construction Lagging Globally?

2024-02-20 Semiconductors editor

TSMC is scheduled to hold the opening ceremony for its Kumamoto plant on February 24. In contrast, the construction progress of its Arizona plant in the United States has been relatively slow.

According to TechNews citing a research report from the Center for Security and Emerging Technology (CSET), the construction speed of semiconductor plants in the United States is the slowest globally due to the intricate regulatory environment. While the U.S. chip law supports the semiconductor industry, it is insufficient to address construction costs and timelines.

Looking at the construction speed of the three major foundries in the United States, they have indeed all fallen behind their original targets. For instance, TSMC’s Arizona plant was delayed by a year, Intel’s Ohio plant was pushed from 2025 to the end of 2026, and Samsung’s Texas plant, due to not receiving chip bill subsidies, was also delayed to 2025.

As per research conducted by CSET on the construction of 635 semiconductor plants from 1990 to 2020, the average time from groundbreaking to production was 682 days globally. However, in the United States, the average was 736 days, significantly higher than the global average and second only to Southeast Asia’s 781 days.

In comparison, the construction speeds in Taiwan, South Korea, and Japan are 654 days, 620 days, and 584 days, respectively, with Japan’s performance being quite remarkable. As for Europe and the Middle East, the average is 690 days, while in China, it is 701 days.

The report further indicates that in the 1990s and 2000s, foundries in the United States had a relatively faster construction speed, with an average time of about 675 days. However, by the 2010s, this time frame extended to 918 days.

Meanwhile, during the same period, the construction speed in China and Taiwan significantly accelerated, with average completion times of 675 days and 642 days, respectively.

Furthermore, the number of foundries in the United States has been declining, from 55 in the 1990s to 43 in the 2000s and 22 in the 2010s. In contrast, the construction speed of foundries in China has significantly accelerated, from 14 in the 1990s to 75 in the 2000s, and further to 95 in the 2010s.

Although China’s semiconductor technology is still in the catch-up phase, the construction of foundries positions it as a dominant force in the industry.

Stringent Regulations in the United States Lead to Slow Factory Construction Despite Favorable Conditions 

The report highlights seven key requirements for foundry construction: Large plots of land, low seismic activity, stable water supply, stable supply of electricity, talent, transportation infrastructure, and nearby land for co-location with key suppliers.

In these aspects, the United States outperforms Taiwan; however, the primary obstacle is regulatory issues.

Due to the unique federal structure of the United States, foundry construction must comply with federal, state, and local regulations, resulting in an exceptionally complex regulatory process. Additionally, environmental policies pose obstacles to foundry construction, particularly due to stringent requirements for environmental protection

The report suggests that to enhance the United States’ competitiveness in the global semiconductor industry, the government needs to streamline regulatory processes, eliminate redundant regulations, and establish expedited pathways to accelerate semiconductor industry construction projects.

Additionally, there should be an acceleration of environmental review processes and investment in the development of alternative materials to ensure sustainable semiconductor material supplies.

With the continued growth in global semiconductor demand, the construction speed and efficiency of US semiconductor fabs will directly impact its position in the global market.

To maintain its leading position, per the report, the United States urgently needs to take action to address this issue. Currently, it is unclear how much impact the delayed construction of semiconductor fabs by TSMC, Intel, and Samsung will have.

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(Photo credit: TSMC)

Please note that this article cites information from TechNews and CSET.