TSMC’s Arizona Packaging Plan

TSMC plans to open an advanced chip-packaging plant in Arizona by 2029, adding a part of chip production the U.S. still largely sends overseas. (reuters.com) Deputy co-chief operating officer Kevin Zhang said the packaging site would support TSMC’s three planned Phoenix fabs, which the company says are aimed at 4-nanometer production in 2025, 2-nanometer in 2028, and N2 and A16 at a third fab by the end of the decade. (reuters.com) (tsmc.com) Packaging is the step after wafers are made: chips are cut, connected and stacked so they can go into servers, phones and cars. TSMC has said advanced packaging is a bottleneck for artificial-intelligence chips because systems like Nvidia’s need several chips and high-bandwidth memory linked in one package. (reuters.com) (tsmc.com) TSMC is expanding in Arizona while slowing on one of the industry’s most expensive tools. Zhang said the company has no current plan to use ASML’s high-numerical-aperture extreme ultraviolet machines through 2029 because the cost is too high. (bloomberg.com) ASML says its first high-NA EUV system, the Twinscan EXE:5000, can print smaller features with a single exposure and reach 8-nanometer resolution. Bloomberg reported those machines sell for more than €350 million, or about $410 million, each. (asml.com) (bloomberg.com) That leaves TSMC making two bets at once in the U.S.: move more of the back-end work closer to customers, but keep using existing EUV tools longer at the front end. Zhang made a similar cost argument in May 2024, when he said TSMC’s A16 technology would not need high-NA EUV. (reuters.com) (bloomberg.com) TSMC’s Arizona buildout has grown fast. The company said in March 2025 that it intended to add $100 billion to its U.S. investment plans, bringing the total to $165 billion, on top of earlier CHIPS Act support announced with the Commerce Department in April 2024. (tsmc.com 1) (tsmc.com 2) For U.S. officials, the missing piece has been more than wafer capacity. Reuters reported that most advanced packaging is still done in Asia, so adding that step in Arizona would keep more of the production chain for artificial-intelligence chips inside the United States. (reuters.com) TSMC told investors last week that 2026 revenue should grow by more than 30% as demand for artificial-intelligence chips stays strong. The Arizona packaging plant and the delayed tool upgrade show where the company is willing to spend — and where it is not. (bloomberg.com 1) (bloomberg.com 2)