Taiwan Semiconductor is building a 2nd chip plant in Arizona

Yahoo Finance’s Dan Howley joins the Live show to discuss the opening of Taiwan Semiconductor’s second chip plant in Arizona.

Video transcript

- But we begin today with our top story. President Biden is celebrating this morning as the White House and Taiwan Semiconductor have announced the opening of a second chip plant in Arizona, bringing the chip giant's investment in the state to $40 billion. Yahoo Finance tech editor Dan Howley is here with the latest. Dan.

DAN HOWLEY: That's right, Brian. This is going to go from $12 billion worth of investments to the $40 billion that you're talking about. The first plant is already under construction. The second one is going to get underway. And we'll have President Biden there as well as the founder of Taiwan Semiconductor and an appearance by Apple's Tim Cook as well as Nvidia's Jensen Huang.

The chip plant itself, the first one is going to be making 4 nanometer chips. That will get underway in 2024. The second one will be making 3 nanometer chips. The difference really between that is how many kind of little diodes and whatnot that you can add into the actual chips themselves so that they're able to provide more information and run a bit faster.

This is going to be coming from-- at least part of the funding likely is coming from the $50 billion CHIPS Act that was signed this summer by Biden. And we do have a statement from Nvidia's Jensen Huang from the announcement. He says, "from the beginning, Nvidia has entrusted TSMC as we invented the GPU and accelerated computing and revolutionized 3D graphics, scientific computing, AI, and self-driving cars. Our ongoing work on drug discovery and climate science would not be possible without them.

Bringing TSMC's investment to the United States is a masterstroke and a game-changing development for the industry." And just to give you a sense of how much or how many chips it's going to be putting out, it should be able to meet us demand for chips from the factories itself. And don't forget, we have other companies that are continuing to push investments, including Intel. And this obviously comes as a result of the slowdowns and backlogs that we had seen because of the COVID outbreaks in China.

- Dan, it was particularly interesting some of not just the chips that you mentioned were going to be manufactured there, but the time frame. And if you could walk us further into this, how to ensure that not only are we breaking ground and ultimately bringing capacity online, but that future administrations are also continuing some of the spending initiatives around chip production here in the US?

DAN HOWLEY: Yeah. So it does take quite a while for chip manufacturing facilities, or fab facilities what they're called, to get online. This isn't putting up an Amazon warehouse. You have to make sure that the area is seismically sound. If not, the building has to be isolated. Basically, any kind of movement that you could see from the building itself could mess up the chips and the lithography that they use to create them.

So they have to be very, very well built and protect the facilities. And then it takes some time for the chips themselves-- weeks, maybe as long as a month or two-- for them to actually get up and running. And so that's one of the big deals that we're seeing from these manufacturers is not only making sure that they can have the facilities built, but then that the chips get up and running.

And TSMC isn't going to be using its highest end chips here or building its highest end chips here. The transistors are going to be a little bit less dense than what we could see in Taiwan. We're going to get the 3 nanometers here, which is amazing. But we could see more advanced chips in Taiwan, where, obviously, their home market is being built.

- And Dan, what you're describing, the incredibly complex process of building the plant, let alone building the chips once the plant gets done, I mean, we sort of have a history in this country of big promises by foreign manufacturers to build things. They don't always come to fruition. So I just wonder sort of what could go wrong potentially with all of these big plans?

DAN HOWLEY: Yeah. If you're referring to Foxconn in Wisconsin--

- I am.

DAN HOWLEY: --yeah. That kind of went south. And now it's basically a parking lot. But this seems to be something that would be-- I would presume have more pressure from the kind of customers that TSMC has. We're talking about Apple. We're talking about Nvidia. We're talking about these big name companies that need these processors. And Tim Cook has told Apple employees that they're going to be sourcing from these plants in Arizona.

So for TSMC to kind of go back on that or scale down plans the way we saw Foxconn, yeah, I just don't necessarily see that happening. The demand is there for these chips. It's only going to grow. Obviously, we have chips in smartphones. The cameras that we're using right now. Our laptops. But it's not just that. It's our cars. It's medical devices. Anything that you have that's plugged in now essentially has microchips in it.

So I do think that it's going to be something that does end up coming to fruition just because of that sheer demand. And as I said, it's not just going to be TSMC that's going to have to be built-- or building these facilities. We're going to have to see other companies stepping up. As I said, Intel is one of them. We have Texas Instruments. Micron. A number of other companies are continuing to build in the US just because we don't have the capacity that we once had.

- All right. Dan Howley with the Chips Ahoy there to start off the show for us today. Appreciate it, Dan. Thanks so much for breaking this down.

DAN HOWLEY: I love Chips Ahoy.

- We all do, don't we?