Arizona governor says state in talks with TSMC on advanced packaging

By Sarah Wu

TAIPEI (Reuters) -Arizona is in talks with Taiwanese chipmaker TSMC on advanced packaging, Governor Katie Hobbs said on Tuesday, as the U.S. state seeks to attract more investment and address challenges that TSMC's massive project has encountered there.

TSMC is investing $40 billion to build two chip fabrication facilities, or fabs, in Arizona, supporting Washington's plans to boost U.S. chipmaking capacity.

"Part of our efforts at building the semiconductor ecosystem is focusing on advanced packaging, so we have several things in the works around that right now," Hobbs said on the sidelines of a U.S.-Taiwan supply chain forum in Taipei.

TSMC said in a statement it had updated the governor on the "positive" progress made on the Arizona fabs, but did not directly mention plans for advanced packaging facilities.

"We believe the dialogues that we held during this visit will help us to work together even more closely in the future," TSMC said.

Crucial for artificial intelligence (AI) chips, advanced packaging techniques can stitch multiple chips together into a single device, lowering the cost of more powerful computing.

Facing a surge in AI-related demand, TSMC has been unable to fulfil demand for advanced packaging services and has been rapidly expanding capacity, including a nearly T$90 billion ($2.81 billion) investment in a new facility in Taiwan.

In July, TSMC said its first Arizona fab would be delayed until 2025 because of a shortage of specialist workers and it was sending technicians from Taiwan to train local staff. Production had been due to start next year.

Hobbs said she did not expect further delays.

"The project is going well in Arizona. I'm very impressed by the speed with which it's been built and we are working through bugs and expect it to continue on schedule," she said.

Her delegation's meetings with TSMC executives on Monday focused on their "continued partnership" and how to address any issues that arise, Hobbs said.

"We're continuing to make sure that we have the skilled workforce that's needed, both on the advanced manufacturing side but also the construction side so that we can continue these investments."

Taiwan Semiconductor Manufacturing Co Ltd, the world's largest contract chipmaker, counts Apple and Nvidia among its major clients.

Taiwan President Tsai Ing-wen, meeting Hobbs at the presidential office later on Tuesday, praised TSMC's Arizona plant as a symbol of cooperation.

"These joint efforts also will help us create more secure and resilient supply chains," Tsai said.

($1 = 32.0120 Taiwan dollars)

(Reporting by Sarah Wu; Writing by Ben Blanchard; Editing by Muralikumar Anantharaman, Edmund Klamann Christian Schmollinger and Emelia Sithole-Matarise)