Taiwan Semiconductor Manufacturing Co. Ltd. will spend $40 billion to build chip plants in Arizona as part of a new investment plan that is expected to be announced today.

TSMC is the world’s largest contract chip manufacturer. It operates a network of chip plants, or fabs, that other companies can use to produce processors based on their custom designs. It also makes the systems-on-chip that power Apple Inc.’s iPhones, data center processors and a range of other semiconductor products. 

Last year, TSMC announced that it will build a fab in Arizona at a cost of about $12 billion. The updated investment plan that will be announced today more than quadruples the value of the project to $40 billion, the Financial Times reported. As part of the expanded plan, it is set to build a second, more advanced fab that will significantly increase its chip production capacity.

The first fab TSMC is building in Arizona was originally intended to produce processors using the company’s five-nanometer chip manufacturing process. That process powers the chips in Apple’s 2021 iPhone lineup. According to the Financial Times, the new $40 billion investment plan will see TSMC upgrade the facility to produce chips based on its more advanced four-nanometer process.

TSMC has introduced multiple versions of its four-nanometer process. The most advanced version, which debuted last December, makes it possible to build chips that have 15% higher clock speeds than what can be achieved with TSMC’s previous-generation technology.

The second fab in Arizona will be capable of producing even more advanced chips. According to the Financial Times, the fab will make chips based on the company’s newest and most advanced three-nanometer process. TSMC reportedly began mass-producing chips using the process a few months ago.

The first iteration of TSMC’s three-nanometer technology is expected to provide 15% higher performance than its five-nanometer process. In addition, the technology is expected to facilitate the production of chips that use up to 30% less electricity.

The first Arizona fab that TSMC is building as part of its $40 billion investment is reportedly set to begin producing four-nanometer chips in 2024. The second, more advanced fab will start making three-nanometer chips in 2026. CNBC reported that the facilities will be capable of processing 600,000 silicon wafers per year, enough to meet annual chip demand in the U.S.

The investment comes four months after President Joe Biden signed the CHIPS and Science Act into law. The legislation allocates $52.7 billion to supporting domestic chip development and production. TSMC is one of several chipmakers that are expanding their domestic chip production capacity. 

In September, Micron Technology Inc. detailed plans to build a $15 billion memory chip plan near its Bose, Idaho headquarters. The following month, the company  announced that it will spend up to $100 billion to build a cutting-edge memory chip plant in New York.

Intel Corp. earlier announced plans for two processor fabs in Ohio that are expected to cost over $20 billion. The fabs will be located on a nearly 1,000-acre “megasite” that can in theory accommodate eight fabs. According to Intel, its total investment in the campus could reach as much as $100 billion over the next decade.

Intel operates a 700-acre chip manufacturing campus in Chandler, Arizona that houses four fabs. The company is currently working to add two more fabs to the campus as part of a $30 billion initiative announced last year. The new facilities are expected to become fully operational in 2024.

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