Apple chip maker TSMC planning bond sale to fund Arizona expansion

Apple Silicon maker TSMC plans to raise over half a billion dollars in bonds as it attempts to expand its operations to Arizona while facing a worldwide chip shortage.

Taiwan Semiconductor Manufacturing Co. (TSMC) reportedly plans on offering around NT$16 billion (US$565.25 million) of bonds in the auction. The chipmaker will face a global rate hike, as many corporate bond yields have recently risen from record lows.

The bonds will help fund an advanced U.S. chip factory in Arizona, which could be up and running by 2023. It's currently unclear if the company will receive financial incentives from the U.S. in addition to the bond sale. A factory producing 5nm chips could cost more than $10 billion.

Taiwan-based TSMC is the world's largest contract manufacturer of silicon chipsets and has long been Apple's primary supplier of A-series chips. The company makes chips in iPhones and iPads and the M1 chips in the latest Macs. TSMC is also reportedly working on chips for the "Apple Car."

In January, TSMC announced that its 2021 capital expenditure could add up to as much as $28 billion. That would be a significant rise over its $17 billion in 2020 spending.

The bond offering is happening during a drought that has Taiwan's reservoir levels below 20% capacity. The China-U.S. trade war contributes to the water shortage, as local factory expansion has exacerbated the already diminishing water supply.

There is also a worldwide shortage of critical rare-earth materials used in processors exacerbating the chip supply globally. President Biden plans on signing an executive order to address chip shortages. The Biden administration has also pressed Taiwan to step up silicon production that has affected the auto industry and other supply chains.

30 Comments

lkrupp 10521 comments · 19 Years

About 3 years ago

It would be nice for Apple to have a U.S. supply chain source for its M1 series chips. Except for the construction of the facility itself this move wouldn’t be a job driver. These chip plants are highly automated and the few employees needed have to be highly skilled and specialized, something the U.S. labor market cannot provide at this point. So the jobs would go to foreign workers with special visas.

jdgaz 406 comments · 9 Years

Intel Fabs are here in Arizona. Plenty of highly trained talent around here.

melgross 33607 comments · 20 Years

lkrupp said:

It would be nice for Apple to have a U.S. supply chain source for its M1 series chips. Except for the construction of the facility itself this move wouldn’t be a job driver. These chip plants are highly automated and the few employees needed have to be highly skilled and specialized, something the U.S. labor market cannot provide at this point. So the jobs would go to foreign workers with special visas.

There shouldn’t be a oroblem hiring the people they need. There are plenty. It’s not as though massive numbers of chips aren’t being produced here already.

commentzilla 770 comments · 10 Years

So is this going to be like the Foxconn (con) expansion in Wisconsin where they built a facility with tax breaks and never used it?

We certainly need to bring some of this high-tech manufacturing back to America. It will likely hike the cost but total reliance on Asia with China in the backyard is risky. We certainly don't need to bring all of the manufacturing back, just enough capacity to sustain us in a crisis or embargo. We have a lot of foreign car manufactures who have factories here now, so I'd think it's doable if we we place more long term emphasis on higher education training. We really should be extending guaranteed (free) K-12 into 2-years of community college where people can pickup a trade or prepare them for a 4-year college degree, in exchange for 2-years of public or military service.

TSMC US effort seeking subsidy, similar to Foxconn Wisconsin deal

https://appleinsider.com/articles/20/06/09/tsmc-us-effort-seeking-subsidy-similar-to-foxconn-wisconsin-deal

GeorgeBMac 11421 comments · 8 Years

commentzilla said:

So is this going to be like the Foxconn (con) expansion in Wisconsin where they built a facility with tax breaks and never used it?

We certainly need to bring some of this high-tech manufacturing back to America. It will likely hike the cost but total reliance on Asia with China in the backyard is risky. We certainly don't need to bring all of the manufacturing back, just enough capacity to sustain us in a crisis or embargo. We have a lot of foreign car manufactures who have factories here now, so I'd think it's doable if we we place more long term emphasis on higher education training. We really should be extending guaranteed (free) K-12 into 2-years of community college where people can pickup a trade or prepare them for a 4-year college degree, in exchange for 2-years of public or military service.

TSMC US effort seeking subsidy, similar to Foxconn Wisconsin deal
https://appleinsider.com/articles/20/06/09/tsmc-us-effort-seeking-subsidy-similar-to-foxconn-wisconsin-deal

Yeh, one of the lessons we learned from the 2008 Economic Catastrophe was that organizations had have some of THEIR blood in the game.
Back then banks were profiting from betting other peoples money. For them it was a win-only bet: They used other people's money to place the bet -- then they collected the winnings. When it all came crashing down, it was the other people who took the biggest hit. Here we have a similar situation.