Tag: TSMC

  • TSMC to Double 2nm Arizona Foundry Investment, Not Buying Intel

    TSMC to Double 2nm Arizona Foundry Investment, Not Buying Intel

    Key Takeaways

    1. TSMC’s investment in Arizona has increased from $165 billion to a potential $300 billion due to tariff concerns.
    2. Discussions about TSMC acquiring Intel occurred, but the US decided against pushing for this buyout.
    3. The initial $165 billion investment covers only 7% of the chip demand from US companies like Apple.
    4. A 20% tariff on semiconductors from Taiwanese foundries is expected to be announced soon, prompting TSMC’s increased investment.
    5. TSMC aims to produce at least 30% of its global 2nm manufacturing in Arizona and is not moving forward with the Intel acquisition.

    After the announcement that the tariffs imposed by the Trump administration on chip imports might put TSMC’s $165 billion investment in a 2nm/3nm process foundry in Arizona at risk, the company appears to be facing an even bigger financial commitment.

    Increased Investment Amount

    Trump has stated that TSMC’s investment in the US will now be no less than $300 billion, which is nearly two times what they had previously promised. However, this amount still falls short of a rumored Intel buyout that US officials purportedly wanted TSMC to pursue.

    Industry Insights

    Ming-Chi Kuo, a well-known analyst from Taiwan who accurately forecasted the A18 Pro chipset for the iPhone 16 Pro Max, has confirmed that discussions about TSMC acquiring Intel did take place. Nevertheless, the US decided not to push forward with this request after understanding the real challenges Intel is facing.

    Instead, it seems that TSMC will now need to invest around $300 billion into its production facilities in Arizona. So far, the company has announced investments totaling $165 billion, which, according to Treasury Secretary Scott Bessent, would only cover about 7% of the modern chips that US companies like Apple actually require.

    Future Expectations

    This percentage is expected to increase substantially if TSMC truly commits $300 billion to direct investments in the US, as a strategy to avoid a 20% tariff on semiconductors produced in its Taiwanese foundries. This tariff is anticipated to be announced next week. If the White House had indeed required TSMC to acquire Intel along with this investment, the chipmaker would face a staggering $565 billion commitment in the US, which seems rather improbable.

    According to Kuo, given Trump’s usual approach, the most likely scenario is that TSMC will negotiate to lower the initial high demands for tariffs and investments set at the beginning of discussions.

    Nonetheless, TSMC has ambitious plans for Arizona, aiming to produce at least 30% of its global 2nm manufacturing there and plans to create even more advanced nodes in the future. It is important to note that TSMC is not going forward with buying Intel, even though the foundry plays a significant role in US trade talks with Taiwan.

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  • TSMC Takes Legal Action Over Potential Trade Secrets Leak

    TSMC Takes Legal Action Over Potential Trade Secrets Leak

    Key Takeaways

    1. TSMC has taken legal and disciplinary actions against staff for leaking confidential trade information.
    2. Two ex-employees and a related individual have been arrested, marking the first use of national security law for trade secrets in Taiwan.
    3. The breach was detected early through TSMC’s monitoring systems, although details of the information leaked remain undisclosed.
    4. The leak may involve TSMC’s upcoming 2-nanometer chip technology, with mass production expected in late 2025.
    5. Taiwanese authorities have conducted interrogations and searches related to the case as part of the ongoing investigation.

    Taiwan Semiconductor Manufacturing Company (TSMC) has disclosed that it has taken legal and disciplinary measures against staff who are believed to have leaked confidential trade information from the firm. This possible breach of trade secrets was uncovered through a standard monitoring process, which indicated unauthorized actions, as reported by Reuters.

    Arrests Made in Connection with the Case

    Following these revelations, Taiwanese officials apprehended two ex-employees along with a third individual related to these charges. This marks the first instance in which the national security law will be applied in a case involving trade secrets. TSMC has not provided additional information about what was leaked or the extent of the breach, stating that judicial scrutiny restricts their ability to disclose such details.

    Early Detection of the Leak

    The firm indicated that the breach was identified during its initial stages. “Thanks to our extensive and effective monitoring systems, we were able to spot the problem early,” TSMC stated. According to Nikkei Asia, it appears that the employees might have been involved in acquiring details about TSMC’s 2-nanometer (N2) chip technology, although it remains unclear who received this information.

    This specific chip is still being developed and is expected to be the most advanced regarding density and energy efficiency, according to the manufacturer. TSMC has announced that mass production is projected for the second half of 2025, aiming for a commercial release in early 2026.

    Investigation Details Released

    The Taiwan High Prosecutors Office revealed that multiple suspects and witnesses were interrogated between July 25 and July 28, and multiple searches were performed at the homes and workplaces of those involved, as reported by The Financial Times.

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  • US Pressures TSMC to Acquire 49% of Intel for Tariff Relief

    US Pressures TSMC to Acquire 49% of Intel for Tariff Relief

    Key Takeaways

    1. The US government, under President Trump, has used trade tariffs inconsistently to address the trade deficit, significantly impacting Taiwan as a trading partner.

    2. Taiwan faces a 20% tariff on exports to the US, higher than Japan’s 15%, prompting negotiations for potential tariff reductions.

    3. TSMC is under pressure from Trump to meet two strict conditions for tariff relief, which includes a substantial financial investment and a stake in Intel.

    4. Intel is struggling financially, with a 33% revenue drop from 2021 to 2024, raising concerns about its ability to meet the US’s semiconductor manufacturing goals.

    5. TSMC’s potential reluctance to comply with US demands regarding Intel could affect the future of both companies and the US chip supply chain.

    The US government, under President Donald Trump, has primarily utilized trade tariffs to tackle the nation’s trade deficit with its partners. However, this tariff strategy has been inconsistent and often unexpected. Taiwan, a significant trading ally of the US, has also felt the impact of these tariffs.

    Tariff Rates and Their Implications

    With tariffs set at 20%, Taiwan faces a higher rate than nations like Japan, which has a baseline of 15%. Unsurprisingly, this 20% tax on Taiwanese exports to the US can severely impact Taiwanese companies. Therefore, Taiwan is negotiating with the US to lower these tariffs or potentially remove them completely. Nevertheless, a recent report from Taiwan indicates that President Trump has laid down two tough conditions for any tariff relief.

    According to mnews.tw, an industry insider revealed that Trump has required TSMC to meet these two strict conditions in exchange for tariff reductions. Ignoring the implications of TSMC owning 49% of Intel, these requirements are significant financial obligations. TSMC is already pouring a considerable amount into the US, with one of its fabrication plants expected to begin volume production by 2024. The company is also in the process of constructing two additional fabs in Arizona, along with an R&D center and a packaging facility. In total, TSMC has committed to investing $165 billion in the US.

    Financial Challenges Ahead

    Trump’s supposed requirement for TSMC to invest an additional $400 billion in the US while acquiring a share in Intel appears unrealistic from a financial perspective. Intel is experiencing a downward trend. All its sectors, from fabrication to consumer goods, are facing challenges. This decline is reflected in its reported annual revenue, which has dropped dramatically from $79 billion in 2021 to $53 billion in 2024, marking a 33% decrease.

    Intel plays a crucial role in the US strategy for domestic semiconductor manufacturing. The company has already secured billions in federal funding. However, this financial aid hasn’t resolved Intel’s issues, as the timeline for its Ohio fab has been pushed back from 2025 to between 2030 and 2031. This delay appears to be tied to Intel’s attempts to conserve capital in light of insufficient support from the US CHIPS Act and external partners.

    The Future of TSMC and Intel

    In summary, it seems that the US administration is pressuring TSMC to take a significant stake in Intel to provide much-needed capital and sustain the US’s domestic chip supply chain ambitions. However, TSMC might not agree to this condition.

    It will be interesting to watch Intel in the next few months. There are some promising products in development, like the Panther Lake and Nova Lake CPUs. If these products perform well, it could lead to improvements for Team Blue.

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  • TSMC’s Kumamoto Fab Delay to 2029 Amid U.S. Expansion Focus

    TSMC’s Kumamoto Fab Delay to 2029 Amid U.S. Expansion Focus

    Key Takeaways

    1. TSMC’s second plant in Kumamoto will start volume production in the first half of 2029, 18 months later than planned.
    2. The groundbreaking for the second plant has been delayed to “sometime in 2025” due to site congestion and traffic issues.
    3. Resource reallocation to U.S. facilities for tariff management contributes to uncertainty in the new start date.
    4. Limited demand for advanced 6 nm and 7 nm technologies in Japan is causing further delays in the project’s urgency.
    5. The overall investment for TSMC’s plants is around ¥2.96 trillion, with potential subsidies from the Japanese government of up to ¥1.2 trillion.

    TSMC’s efforts to grow its presence in Japan are facing setbacks. The company’s second plant in Kumamoto is now projected to start volume production in the first half of 2029, which is about eighteen months later than previously planned, as reported by Nikkan Kogyo Shimbun through MoneyDJ.

    Construction Timeline Changes

    The construction schedule has also been altered. Initially, the groundbreaking was set for the first quarter of 2025, but it has since been adjusted to “sometime in 2025.” C.C. Wei, the chair and CEO of TSMC, explained that the delays are due to congestion and traffic complications at the site. Additionally, The Wall Street Journal noted that TSMC is reallocating resources to its facilities in the U.S. to better manage tariff regulations, making the new start date uncertain.

    Market Conditions Impacting Progress

    Market conditions seem to be another challenge. According to Economic Daily News, the 6 nm and 7 nm processes intended for the second Kumamoto plant aim at clients like Sony and Denso. However, there is currently a limited demand in Japan for such advanced technologies, which diminishes the urgency for rapid development and leads to further delays.

    Despite the troubles with Kumamoto 2, the first Kumamoto plant is progressing well. Wei informed investors that this initial plant, which specializes in 12 nm to 28 nm chips, began mass production in the latter half of 2024 and is already seeing favorable output.

    Future Expectations

    Looking forward, both plants are anticipated to produce over 100,000 12-inch wafer equivalents monthly once they are fully operational. The overall investment is projected to be around ¥2.96 trillion (approximately $20.04 billion), with the Japanese government providing up to ¥1.2 trillion (about $8.12 billion) in subsidies. The timely arrival of that capacity now hinges on how quickly infrastructure issues can be resolved and how the demand for advanced automotive and imaging chips in Japan develops throughout the decade.

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  • TSMC Q2 Revenue Soars 38.6% to $31.8 Billion, Sets Record

    TSMC Q2 Revenue Soars 38.6% to $31.8 Billion, Sets Record

    Key Takeaways

    1. TSMC reported record revenue of NT$933.79 billion ($31.81 billion) for April-June, a 38.6% increase from last year, and net profits rose by 60.7% to NT$398.27 billion ($13.57 billion).

    2. The company achieved strong financial metrics with a gross margin of 58.6%, operating margin of 49.6%, and net margin of 42.7%, largely driven by advanced nodes, with 74% of wafer revenue from processes of 7 nanometers or finer.

    3. Demand for AI and high-performance computing significantly contributed to TSMC’s success, with management expecting third-quarter revenue to rise between $31.8 billion and $33.0 billion, a potential 40% year-on-year increase.

    4. Risks include potential U.S. semiconductor tariffs, a projected 12% increase in the Taiwan dollar in 2025, and softer iPhone sales, which could affect profitability in the December quarter.

    5. Despite geopolitical uncertainties and currency fluctuations, TSMC remains a critical player in the generative AI supply chain, with strong customer orders and a capital expenditure plan of $38-42 billion.

    TSMC has reported its best performance ever in the April-June timeframe, with revenue climbing 38.6 percent from last year to reach NT$933.79 billion ($31.81 billion). This surge in revenue also propelled net profits up by 60.7 percent, bringing it to NT$398.27 billion ($13.57 billion). Diluted earnings stood at NT$15.36, which is equivalent to $2.47 per American depositary receipt.

    Strong Financial Metrics

    The company saw an expansion in gross margins to 58.6 percent, while the operating margin was recorded at 49.6 percent, and the net margin at 42.7 percent—figures that are quite rare among major chip manufacturers. Advanced nodes played a critical role in this success: 3-nanometer wafers accounted for 24 percent of quarterly sales, 5-nanometer made up 36 percent, and 7-nanometer contributed 14 percent. This means that processes of 7 nanometers or finer represented a significant 74 percent of wafer revenue.

    Positive Outlook Amid Challenges

    Wendell Huang, the Chief Financial Officer, attributed this success to the “continued strong AI and high-performance computing demand.” Meanwhile, C.C. Wei, the Chief Executive, mentioned that Nvidia’s newly approved H20 shipments to China is “very positive news” for both companies. These factors led to a 17.8 percent increase in Q2 revenue compared to the previous quarter, even with a stronger Taiwan dollar.

    Looking ahead, management anticipates third-quarter revenue to be between $31.8 billion and $33.0 billion, which is as much as a 40 percent increase year-on-year. However, they have adjusted their gross margin forecast lower to a range of 55.5-57.5 percent and operating margin to 45.5-47.5 percent. The full-year revenue forecast has been upgraded to approximately 30 percent growth in U.S.-dollar terms. However, the appreciation of the Taiwan dollar and the initial expenses related to new fabs in Arizona and Japan could pressure profitability.

    Risks and Future Considerations

    Possible semiconductor-specific tariffs in the U.S., a projected 12 percent increase in the Taiwan dollar in 2025, and softer iPhone sales pose risks for the December quarter. Despite these issues, TSMC has maintained its capital expenditure plan at $38-42 billion and reports that customer orders remain strong. Company stocks, which surged by about 80 percent last year, have only increased by 5 percent year-to-date due to concerns surrounding policy and currency fluctuations.

    In the current landscape, TSMC is a key player in the generative AI supply chain, and for the time being, the demand for its cutting-edge production capabilities significantly overshadows macroeconomic and geopolitical uncertainties. Whether tariffs and exchange-rate issues will impact the firm’s leading margins will likely become clearer as 2025 approaches.

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  • Intel to Cut 2,392 Jobs in Oregon by Mid-July for Cost Savings

    Intel to Cut 2,392 Jobs in Oregon by Mid-July for Cost Savings

    Key Takeaways

    – Intel plans to cut 2,392 jobs in Oregon, significantly higher than the previously announced 500 layoffs, as part of a cost-reduction strategy under CEO Lip-Bu Tan.
    – The job losses will negatively affect Oregon’s economy, where Intel is the largest employer, potentially impacting local businesses and income-tax revenue.
    – Intel is struggling to compete in the semiconductor market, trailing behind TSMC and missing opportunities in key areas like AI training chips.
    – The layoffs will impact all levels within the company, particularly in Intel Foundry, with significant cuts to technicians and process engineers, and the disbanding of the automotive division.
    – Laid-off employees will receive severance pay and healthcare benefits, but Intel’s future operations in Oregon remain uncertain despite ongoing tax incentives.

    Intel has informed Oregon officials that it plans to cut 2,392 jobs in the state by mid-July, a significant increase from the earlier figure of just over 500 layoffs. This decision is part of a larger effort to reduce costs under the new CEO, Lip-Bu Tan, who is reacting to decreased sales and ongoing manufacturing problems.

    Economic Impact on Oregon

    Oregon is home to Intel’s largest facility globally, employing around 20,000 people. The semiconductor industry in the state typically pays an average salary of nearly $180,000 per year. Consequently, such job losses are likely to have a negative effect on local businesses and decrease income-tax revenue. State economist Carl Riccadonna has already cautioned lawmakers about a weakening job market.

    Competitive Struggles

    Intel’s current difficulties can be traced back almost a decade, when delays in its technology allowed TSMC to take the lead. Competitors like AMD, Nvidia, and Apple now depend on TSMC’s advanced technology, while Intel fights to reclaim its position and is mostly missing out on thriving markets like AI training chips. “In terms of training, I fear it may be too late for us,” Tan mentioned to employees, noting that Nvidia’s hold is “too strong.”

    Specific Job Reductions

    The workforce cuts affect every level within the company, but they are particularly severe in Intel Foundry, which focuses on manufacturing and research and development. About one in five positions in this area will be eliminated. Many of the layoffs will impact technicians and process engineers, though around eight percent of those let go hold management roles. In addition to manufacturing cuts, Intel has disbanded its automotive division and shifted most marketing responsibilities to Accenture.

    Laid-off employees will receive 13 weeks of their base salary plus an additional 1.5 weeks for each year they have worked, along with a year’s worth of healthcare benefits. Even though Intel still benefits from over $300 million in annual tax incentives from Oregon, its reduced revenues and changing priorities make the future scale of its operations in the Pacific Northwest uncertain.

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  • SoftBank to Build $1 Trillion AI Hub in Arizona with TSMC

    SoftBank to Build $1 Trillion AI Hub in Arizona with TSMC

    Key Takeaways

    1. SoftBank, along with OpenAI, Oracle, and MGX, plans to invest up to $500 billion in AI infrastructure through the Stargate project initiated by the Trump administration.
    2. Masayoshi Son aims to create a $1 trillion complex in Arizona, called “Project Crystal Land,” focusing on AI and robotics to compete with China’s Shenzhen complex.
    3. The initiative supports the revival of high-tech manufacturing in the US, emphasizing robotics and AI-driven industrial infrastructure.
    4. TSMC’s involvement is still uncertain, and SoftBank is seeking partnerships with other tech giants, including Samsung, to finance the ambitious project.
    5. The collaboration could significantly reshape the US technological landscape, highlighting the role of innovation and infrastructure in economic growth.

    SoftBank is one of the key players teaming up with OpenAI, Oracle, and MGX to invest as much as $500 billion in AI infrastructure and data centers through the Stargate project, which was started by the Trump administration earlier in January this year. However, this collaboration is quite small compared to the ambitious plans that SoftBank’s founder, Masayoshi Son, is working on in the United States. Reports from insiders close to Bloomberg suggest that Son has presented an impressive vision to both TSMC and the Trump administration, aiming to create a massive complex in Arizona that will focus on AI and robotics. If all parties come to an agreement, this project could lead to investments reaching a staggering $1 trillion.

    Aiming for High-Tech Manufacturing

    This initiative is part of a wider push to revive high-tech manufacturing in the US, with an emphasis on robotics and AI-driven industrial infrastructure. Son is confident that the $1 trillion Arizona project, dubbed “Project Crystal Land,” has the potential to compete with the Shenzhen complex in China. The ambition behind this project reflects a broader trend of bringing advanced technology production back to American soil.

    TSMC’s Response and Tax Incentives

    According to reports from Bloomberg, TSMC has yet to release any official remarks about its involvement in this project. Notably, it is said that this initiative is separate from TSMC’s chip fabs located in Phoenix, Arizona, where they recently began producing advanced N4 nodes for various products, including Nvidia’s GPUs. Meanwhile, SoftBank is looking to take advantage of significant tax incentives related to its massive investment. Bloomberg’s sources indicate that discussions with federal and state government officials, including Secretary of Commerce Howard Lutnick, are in the works.

    Son understands that SoftBank alone cannot finance this major undertaking, so they are also looking for partnerships with other technology giants, such as Samsung. Firms benefiting from SoftBank’s Vision Fund, like Agile Robots SE and the soon-to-be-acquired Ampere Computing LLC, are anticipated to establish production facilities at the future Arizona hub.

    Conclusion

    In summary, SoftBank is laying the groundwork for a monumental investment in AI and robotics, with plans that could reshape the technological landscape in the US. Through collaborations and strategic partnerships, the vision of a high-tech future may soon become a reality, highlighting the importance of innovation and infrastructure in driving economic growth.

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  • Pixel 10 to 14 Tensor Chip Shift to TSMC Prompts Samsung Restructure

    Pixel 10 to 14 Tensor Chip Shift to TSMC Prompts Samsung Restructure

    Key Takeaways

    1. Google is shifting its chip production from Samsung to TSMC, starting with the Tensor G5 processor for the 2025 Pixel 10.
    2. The Tensor G5 will utilize TSMC’s advanced 3nm production technology, with plans for the G6 to use 2nm technology in 2026.
    3. Samsung’s foundry is losing market share and facing challenges due to Google’s departure and competition from other manufacturers like SMIC and UMC.
    4. Google’s decision may stem from the need to reduce dependency on a competitor while enhancing its AI and hardware capabilities in Pixel devices.
    5. Samsung executives are reportedly shocked by the loss of Google, prompting a review of their foundry strategy, which could lead to significant changes in their business structure.

    Google has been buzzing about changing its chip production from Samsung to TSMC for quite some time, especially since the launch of the budget-friendly Pixel 8. This shift is confirmed for the upcoming Tensor G5 processor that will be featured in the 2025 Pixel 10.

    A New Era for Google Phones

    This transition means that devices like the Pixel 9 Pro XL, which is currently 20% off on Amazon, will be among the last ones to utilize a processor made by Samsung. The Tensor G5 is said to be manufactured using TSMC’s advanced 3nm production technology, which is what most modern flagship smartphones are made with. Looking ahead, the G6 is anticipated to debut with TSMC’s state-of-the-art 2nm process in 2026. Reports suggest Google has inked a deal with TSMC to produce all its Tensor processors, starting from the G5 in the Pixel 10 and extending all the way to at least the Pixel 14 by 2029.

    Samsung’s Reaction to Losing Google

    According to insiders in the Korean industry, the loss of Google as a client has triggered a significant introspection and review process at Samsung’s foundry. Already challenged by TSMC’s dominance in the 3nm production yield, Samsung’s foundry is quickly losing ground in the market, dropping below 8% share, with even unexpected Chinese rivals like SMIC or UMC posing a risk now.

    The Pixel 10 is still expected to come with an Exynos 5G modem to keep expenses down, but the G5 processor won’t be a product of Samsung’s Exynos division. Reports indicate that Samsung is not only having difficulties with 3nm yield but also with the intellectual property associated with its processor instruction set, which isn’t diverse enough for Google’s desire to create a customized Tensor chipset that fulfills all the features and AI expectations for a contemporary smartphone.

    Implications for the Future

    The news of Google’s shift to TSMC has reportedly “shocked” executives at Samsung, prompting them to undertake a comprehensive review of their foundry business strategy. This could lead to a potential spin-off from the parent company, merging the LSI division into other sectors.

    Another factor in Google’s decision to move away from Samsung as a chip manufacturer may be the escalating competition between the two brands in the smartphone market. Google now provides a complete range of Pixel devices across all market segments, including a foldable phone, and wants to avoid being too dependent on a key competitor for essential components unless there are clear advantages in terms of hardware specifications.

    Regarding TSMC, the company can easily handle the production of Tensor processors since Pixel smartphones remain a niche within the Android ecosystem, even as Google’s ambitions continue to grow.

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  • Nvidia Offers $180,000 Salaries to Attract Taiwan Tech Talent

    Nvidia Offers $180,000 Salaries to Attract Taiwan Tech Talent

    Key Takeaways

    1. Nvidia is increasing hiring in Taiwan to launch a second research and development center.
    2. The company is offering high salaries, up to NT$5.5 million (around US$180,000), to attract experienced engineers.
    3. Nvidia’s recruitment strategy aims to boost R&D investments in Taiwan, known for its strong semiconductor industry.
    4. Competitive compensation packages are shifting the tech talent market in the region.
    5. The hiring efforts align with Nvidia’s long-term growth plans in AI and semiconductor industries, leveraging Taiwan’s engineering skills.

    Nvidia is stepping up its hiring in Taiwan as it gears up to launch a second research and development center in the area. Reports from local news sources indicate that the company is offering annual salaries of as much as NT$5.5 million (around US$180,000) to attract seasoned engineers, particularly those who have experience with top firms like TSMC.

    Attractive Salaries

    According to EBC News, Nvidia’s new operation is drawing in senior engineers with its high-paying salaries. This initiative is part of Nvidia’s strategy to boost its R&D investments in Taiwan, a region often called “Silicon Island” due to its significant role in the global semiconductor industry. Local media outlets describe Nvidia’s recruitment efforts as aggressive, noting that the competitive compensation packages are causing considerable shifts in the tech talent market.

    Competitive Landscape

    While the salaries being provided may seem modest when compared to those in Silicon Valley, Taiwan’s lower cost of living makes them more attractive. Additionally, there are various perks associated with tech positions available. As a result, these job openings are expected to attract a lot of interest.

    Nvidia’s ramped-up hiring efforts likely reflect its long-term plans for growth in the area, taking advantage of Taiwan’s engineering skills to enhance its position in the swiftly advancing AI and semiconductor industries.

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    Nvidia Offers $180,000 Salaries to Attract Taiwan Tech Talent
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  • TSMC Considers UAE for Multibillion-Dollar Chip Manufacturing Plant

    TSMC Considers UAE for Multibillion-Dollar Chip Manufacturing Plant

    Key Takeaways

    1. TSMC is considering building a multibillion-dollar “gigafab” in the UAE, which would be its first manufacturing site in the Middle East.
    2. Ongoing negotiations involve U.S. approvals, with discussions starting during the Biden administration and fluctuating during Trump’s presidency.
    3. A similar facility to the Phoenix complex would require significant financial investment, with concerns about costs and talent attraction.
    4. U.S. officials worry about security risks associated with technology exposure to China and Iran, complicating project approvals.
    5. The UAE lacks a skilled engineering workforce for advanced manufacturing, requiring specialists to relocate, while TSMC focuses on current expansions.

    Taiwan Semiconductor Manufacturing Co. (TSMC) is considering a multibillion-dollar “gigafab” in the United Arab Emirates. This move could bring the most advanced chip-making technology to the Gulf region, depending on U.S. approval. The proposed facility is similar to the six-plant complex being built in Phoenix, Arizona, and would represent TSMC’s first manufacturing presence in the Middle East.

    Ongoing Negotiations

    Discussions have progressed through multiple rounds involving U.S. special envoy Steve Witkoff and MGX, an investment group managed by the UAE president’s brother. These talks began during the Biden administration, slowed down, and then picked up again after Donald Trump returned to office. However, any groundbreaking for the UAE facility is still years away and relies heavily on U.S. permissions.

    Financial Commitments

    The Phoenix complex is projected to cost around $165 billion, so a similar project in the UAE would require a comparable amount of investment and management resources. TSMC has indicated that U.S. semiconductor tariffs could increase costs for the Phoenix site. Additionally, some officials worry that having another mega-site could further challenge budgets and attract talent. The company has already received $6.6 billion in federal subsidies for its U.S. projects and aims to spend $42 billion in 2025 alone.

    Security Concerns

    Higher-ups in the administration express concerns that a fab in the UAE could risk exposing American technology to China or Iran, both of which have strong relationships in the region. Earlier discussions from Biden’s team proposed strict conditions, such as U.S. control over part of the output during emergencies and effective sovereignty over the site. Abu Dhabi found these terms unacceptable, leaving the project uncertain.

    The UAE is still pursuing an AI-driven industrial strategy. It has received U.S. approval to import Nvidia GPUs through a local company, G42, and is hosting OpenAI’s forthcoming “Stargate” data-center project. A TSMC fab would bolster this ambition, but the country currently lacks the skilled engineering workforce needed to operate advanced manufacturing lines, which means specialists would have to move from Taiwan, the U.S., or Japan.

    At this moment, TSMC has stated that it “does not comment on market rumors” and is concentrating on its ongoing expansions. The White House is still deliberating, with some advisers advocating for the broader use of U.S. chip technology internationally while others caution that this plan could undermine the reshoring efforts that Washington is supporting domestically. Until this debate is resolved, the desert fab will remain just a concept.

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