Five suppliers to major chipmakers Intel and TSMC have postponed or scaled back their construction projects in Arizona, reports Nikkei. Rising construction costs and labor shortages seem to be the primary reasons for the delay. These setbacks come despite the suppliers' initial plans to build facilities following Intel's and TSMC's plans to build new semiconductor production facilities in the state.
Numerous companies have acquired land and outlined plans to build facilities in Casa Grande, a town southeast of Phoenix. The location is strategically chosen for its proximity to the world's top two chipmakers, being a 30-minute drive from Intel's expanding plants in Chandler and just over an hour's drive from TSMC's plant in north-western Phoenix.
The construction delays are occurring as the U.S. government prepares to finalize subsidies from the CHIPS and Science Act to support the semiconductor industry. However, financial support for material and chemical suppliers will only be dispatched after the subsidies for major chipmakers like Intel, TSMC, and Samsung are decided. Given the skyrocketing costs, uncertainties with subsidies to chipmakers and their hesitations, suppliers are slowing down their investments in Arizona for now.
LCY Chemical, a major supplier of high-purity chemicals to Intel, Micron, and TSMC has decided to slow down the construction of its U.S. plant in Arizona due to escalating costs. Instead of rushing the construction, the company plans to initially transport chemicals by sea to meet demands of its clients in the U.S. The head of LCY believes that it will be more efficient from economic point of view to produce chemicals in Asia rather than ramp up a plant in Arizona.
Solvay, a leading provider of hydrogen peroxide for chipmaking, has also put the construction of its Arizona plant on hold, awaiting further review. The company has expressed concerns over costs and the prolonged expansion of its primary clients, Intel and TSMC.
Chang Chun Group, another leading producer of semiconductor-grade hydrogen peroxide, has significantly reduced the scope of its new plant construction in Arizona. The company has commenced building part of the plant but on a much smaller scale than initially planned due to the costs being multiple times higher than anticipated.
Similarly, KPCT Advanced Chemicals has postponed the construction of its high-purity sulfuric acid plant in the state.
Topco Scientific, a leading chemical and material distributor, has also paused its plans to construct a logistics center in Arizona. A company executive explained that the local demand does not yet justify such extensive local supplies, making it unnecessary to expedite resource allocation. The executive also highlighted the need for additional investments in infrastructure, such as roads, water, and electricity connections, around the company's planned campus.
