Huawei places a $700 million order with TSMC to produce 5/7nm chips

According to Taiwan's "Economic Daily" report, Chinese manufacturing giant, Huawei, has placed a huge order of up to $700 million with TSMC to manufacture 5nm and 7nm chips. With this order, TSMC is already working in full capacity and may not be taking any more unreserved orders. A few days ago, the US Department of Commerce announced that it will extend Huawei's temporary license for another 90 days. With this announcement, Huawei has a temporary license until August 13, 2020.

However, there was also an announcement that seeks to further hurt Huawei. The announcement says that ALL companies using US chip manufacturing equipment/technology will have to obtain US licenses before supplying certain chips to subsidiaries such as Huawei or HiSilicon. This means that foundries like TSMC may not be able to supply chips to Huawei. However, all pre-existing orders and new orders must be completed within the next 120 days.

For TSMC, it must increase its production capacity in order to meet the huge urgent order demand of customers. According to sources, the 5nm manufacturing process is for Huawei's next-generation flagship Kirin 1020 chip. However, the 7nm version will be for its 5G baseband chips.

A few days ago, TSMC announced that it will build a foundry in Arizona, USA. According to TSMC’s schedule, the U.S. chip factory will start construction in 2021. However, it hopes to commence production in 2024. TSMC’s total expenditures on this project (including capital expenditures) is approximately $ 12 billion between 2021 and 2029.

According to reports, the Arizona plant will use TSMC’s 5nm technology for semiconductor wafer manufacturing. The foundry will have a 20,000 semiconductor wafers production capacity monthly thus directly creating more than 1,600 high-tech professional positions. It will also create thousands of jobs in the semiconductor ecosystem in the U.S.

TSMC claims that this investment has no political "considerations". For the Taiwanese chipmaker, while the US government is seeking development, TSMC "sees opportunities".