Taiwan Semiconductor Manufacturing Company’s new facility in Phoenix, Arizona, has propelled the US city into one of the world’s top FDI destinations for microchip production.

TSMC, the world’s leading contract chip manufacturer, announced the new foundry to manufacture 5-nanometre microchips on May 15. Total investment is set to reach $12bn over the next nine years and production is scheduled to begin in 2024. 

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Phoenix’s mayor Kate Gallego said the project was expected to create 1,600 high-tech jobs, as well with thousands more along the supply chain.

The Phoenix metropolitan area is already home to a sizable semiconductor industry. California-based Intel has invested in a microchip production facility in Chandler, a suburb 40km from Phoenix, since 1980 developing local functions such as supply chain logistics, finance and marketing.

TSMC’s huge investment in Phoenix – alongside Intel’s operation in Chandler – bolsters the wider Phoenix metropolitan area’s position as a leading global hub for chip manufacturing.

China still leads

The Chinese city of Xi’an is the world’s top city for microchip production, according to greenfield investment monitor fDi Markets.

South Korea’s Samsung has a large presence in the city and is in the process of investing an additional $8bn to expand its memory-chip facility, on top of $7bn invested in 2017.

Kiryat Gat is in second place. The Israeli city has become a major production base for Intel, which has pledged investments for more than $20bn.

Singapore is third in the rankings. The southeast Asian city-state has not received mega investments – such as TSMC’s new facility in Phoenix – but has been one of the most consistent destinations for FDI in the production of semiconductors throughout the years, attracting dozens of smaller projects, fDi Markets figures show. 

In addition to Xi’an, the top 10 includes three other Chinese cities (Wuxi, Zhuhai and Suzhou). China has long been a hub for the manufacture of electronic components. 

Foxconn, Samsung, TSMC, Hong Chong Cheng Information Technology, Intel, SK Hynix and Infineon Technologies all have significant operations in the country, fDi Markets figures show. 

US on the rise

However, rising production costs in China combined with global trade tensions are breathing new life into the US semiconductor industry, which now features three cities – Austin, Phoenix and Chandler – in the top 10 as the US government’s efforts to develop domestic industry attracts semiconductor manufacturers. 

“The strong investment climate in the United States, and its talented workforce make this and future investments in the US attractive to TSMC,” the Taiwanese chipmaker said as it unveiled the project in Phoenix.