TSMC's board of directors on Tuesday approved a capital injection of $20 billion into the company's wholly owned subsidiary TSMC Arizona, which will be used to continue the expansion of the Fab 21 site. While the allocation proves that the project is moving smoothly, the company is still facing multiple challenges in Arizona, including labor and water shortages, according to a report from Taipei Times.
The approval of a capital injection is a formal procedure that grants TSMC management the right to use the money for the expansion of Fab 21, and while it is an important milestone, it is a formality, as this is a part of the $165 billion expansion plan that the company introduced last year. What is more important is that TSMC's Fab 21 earned $514 million in profit last year, according to Yeh Chun-Hsien, Taiwan National Development Council (NDC) Minister. Making a profit in a new fab in the first year of full-scale operation is quite a big deal for foundries.
TSMC informed Taiwanese officials that the startup phase of its first Arizona fab proceeded more smoothly than originally projected, which strengthens confidence in the long-term viability of the site, according to Yeh Chun-hsien. At the same time, the company continues to deal with multiple operational difficulties in the U.S., including limited water availability, labor shortages, visa complications for foreign employees, concerns about long-term electricity supply, and regulatory compliance, the report claims.
Water access remains one of the most pressing issues for the project due to the dry and hot climate in Arizona. The company has previously attempted to ease concerns regarding water usage and long-term water supply at Fab 21 by incorporating extensive water recycling and treatment infrastructure capable of supporting advanced fab requirements, though it is unclear whether this has already been done. TSMC hopes to receive assistance from Arizona authorities to ensure reliable water resources for its operations, though environmental and electricity consumption regulations remain concerns as they complicate the project and prevent securing stable power delivery for the site.
Labor availability also remains another major issue. To make matters worse, the company faced difficulties obtaining visas for overseas personnel needed to support operations in Arizona due to the Trump administration's $100,000 fees on the entry of new H-1B visa holders.
In addition, TSMC is encouraging Taiwanese suppliers of semiconductor chemicals and manufacturing equipment to establish operations in the U.S. adjacent to its Arizona campus. However, Yeh noted that enabling broader supplier migration could require adjustments to Taiwan's investment-related laws.
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