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TSMC considers building plant in US

by on14 January 2017


60 percent of revenues to come from US this year


Taiwan Semiconductor Manufacturing Company held its most recent investors conference on January 12th, during which company officials said that it has not ruled out the possibility of building a facility in the US as a response to recent nationalistic pleas to restore American manufacturing jobs.

During the investors conference, company chairman Morris Chang said that fabricating chips in the US “may not necessarily be a good thing,” though the option is still under preliminary consideration. He indicated that the foundry is already helping to create jobs in the US by allowing integrated device manufacturers to succeed on a global scale and expand their operations.

TSMC also disclosed that revenues from customers based in North America accounted for 65 percent of its total wafer revenues in 2016. It projects revenues to stay about 60 percent this year, says Chang.

A shift back to US manufacturing

In late November, US president-elect Donald Trump stated that one of his biggest achievements would be to restore the decades-long decline in US manufacturing employment by relocating jobs from the self-reinforcing “supply chain cluster” of Asian manufacturing firms back to US shores. During his campaign, he declared the promise of a 35 percent tariff levied against products including the iPhone that are manufactured overseas, signaling an incentive for moving jobs back into the hands of blue collar American service occupations.

According to the most recent December 2016 jobs report from Glassdoor.com, TSMC pays its principal engineers a monthly salary of about NT$65,833 ($2,084), while senior engineers get NT$57,783 ($1,829), process engineers get NT$45,014 ($1,425), regular engineers get NT$44,517 ($1,408), and interns get NT$26,250 ($831).

TSMC is not the only foundry considering a facility in the US. Foxconn Electronics (Hon Hai Precision Company) released a statement to IBTimes in December confirming its exploration of expanding in the US. Back in November 2012, Foxconn had previously gone on record and denied reports considering plans to establish a plant in the US near Detroit or Los Angeles. The manufacturer of an estimated 40 percent of the world’s consumer electronic devices said it had already established several facilities in the US and did not have plans to expand at the time.

Then there are companies such as Pegatron, which have declined to formulate such a migration plan due to cost concerns. A 35 percent tariff increase would likely be passed on to consumers, raising the $649 base price of an iPhone to around $876.

"Although TSMC is very clear that it would be much more expensive to make chips outside of Taiwan, it's inevitable for the world's largest contract chipmaker to take 'Made in the U.S.' into consideration," said Sanford C. Bernstein analyst Mark Li. "The alternative is that it would lose Apple orders without moving to America."

Last modified on 16 January 2017
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