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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteChipmakers build semiconductor fabrication plants (fabs) in several countries because no single location optimizes resilience, customers, talent, infrastructure, cost and public policy at the same time. A second or third site can reduce dependence on one region, support customers closer to their operations and qualify for government incentives. It does not make the chip supply chain self-sufficient: semiconductor production still relies on internationally distributed equipment, materials, skills, packaging and logistics.
What a semiconductor fab is—and why location matters
A fab is a highly specialized factory where companies manufacture integrated circuits on silicon wafers. The process involves hundreds or thousands of tightly controlled steps, from depositing and etching microscopic layers to inspecting wafers and preparing them for packaging. A modern fab requires ultra-clean facilities, exceptionally reliable power and water, advanced equipment, trained engineers and a network of suppliers.
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Location therefore affects more than shipping distance. It influences access to technical workers, construction capability, utilities, research institutions, customers, suppliers, financing and government support. Moving a process to another country also requires qualification work: the company must show that the new site can produce chips to the same specifications and yield as an existing site.
The United Kingdom’s National Semiconductor Strategy (2023) describes a supply chain with thousands of production stages distributed around the world, while much manufacturing capacity is concentrated in East Asia, particularly Taiwan. That combination—global interdependence plus regional concentration—is the basic reason geography has become a strategic decision for chipmakers and governments.
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1. Multiple countries reduce exposure to a single region
When critical wafer capacity is clustered in one area, a disruption there can affect many industries simultaneously. Earthquakes, storms, water shortages, power failures, military tension, trade restrictions, disease outbreaks or transport interruptions can delay output far beyond the affected location.
Building capacity in another country is a form of geographic diversification. If the second site makes the same or compatible products, customers may have an alternative source when the first region is disrupted. The benefit is greatest when the additional site contributes meaningful, qualified capacity rather than merely being a symbolic presence.
The UK strategy says that “Building international resilience will require a greater geographical spread of manufacturing across the range of semiconductor technologies, as well as improved levels of transparency to allow more flexible market adjustments.” The statement is a policy objective, not a measured guarantee that every new fab will prevent shortages.
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Intel has similarly said that semiconductor manufacturing became highly centralized and vulnerable to shocks. Its policy materials describe a supply chain involving more than 10,000 suppliers; that figure refers to Intel’s own supply chain, not to the semiconductor industry as a whole.
2. Diversification is not the same as national self-sufficiency
A fab is only one part of semiconductor production. A wafer plant depends on specialist lithography and other equipment, ultrapure chemicals, gases, silicon wafers, software, maintenance teams, electricity, water, packaging and testing. Those inputs are often sourced from different countries.
As a result, a country can host an advanced fab while still relying on overseas suppliers for essential tools or materials. A local plant may also make only certain process nodes or product types. It cannot automatically produce every chip used by domestic companies.
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The UK strategy explicitly cautions that no country can achieve complete autonomy. It also says that greater resilience cannot be created quickly. New fabs take years to design, permit, build, equip and qualify; supplier ecosystems and specialist workforces take longer to mature.
Geographic spread can reduce the impact of some disruptions, but it does not remove global interdependence. A shock affecting a critical equipment supplier, chemical producer or advanced packaging hub could still reach fabs on several continents.
3. Fabs can serve customers and partners closer to their markets
Foundries and integrated device manufacturers may place fabs near important customers or technology partners. Customers can value having production in a particular market for supply-continuity planning, regulatory reasons, engineering collaboration or corporate risk management.
When TSMC announced its Arizona project in 2020, the company said: “This U.S. facility not only enables us to better support our customers and partners, it also gives us more opportunities to attract global talents.” The statement identifies the company’s rationale; it does not prove that every customer requires local manufacturing or that every fab automatically shortens delivery times.
A nearby site can nevertheless make joint development and problem-solving easier. Engineers from a customer and a foundry may collaborate on process qualification, packaging or design-for-manufacturing issues without relying entirely on long-distance travel and communication. Production in a customer’s home region can also provide a second source for products that were previously made in one geography.
4. Talent, infrastructure and investment conditions influence the decision
Fabs are long-lived capital projects, and their economics depend on conditions that vary by country.
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Specialist workers
Designers, process engineers, equipment technicians, electricians, construction specialists and factory operators are all needed. A site near universities, established technology companies or an existing manufacturing base may have an easier time recruiting and training workers. TSMC cited a talented U.S. workforce and opportunities to attract global talent when explaining its Arizona plan.
Reliable utilities and construction capacity
Fabs need extremely stable electricity, large volumes of high-quality water and dependable waste treatment. They also require contractors who understand cleanrooms, vibration control, hazardous-material systems and precision installation. A country with suitable land but weak utility or construction infrastructure may not be competitive.
Suppliers and research networks
Being near equipment service teams, chemical suppliers, packaging companies and research institutions can reduce operational friction. A new fab may also encourage suppliers to build nearby, creating an ecosystem that is difficult to reproduce immediately in another country.
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TSMC’s 2020 announcement pointed to the U.S. investment climate as well as federal and Arizona support. Tax treatment, permitting, energy prices, labor rules, financing conditions and the predictability of policy all affect a project’s long-term economics. Public support is one factor among many; the cited sources do not establish that subsidies alone determine where every fab is built.
5. Governments use fabs to pursue reliability, competitiveness and security
Governments may offer grants, tax credits, loans, infrastructure support or expedited permitting to attract semiconductor investment. Their objectives can overlap but are not identical.
- Supply reliability: Local or regional capacity can reduce dependence on a distant production cluster for strategically important chips.
- Economic competitiveness: A domestic manufacturing base can support downstream electronics, automotive, communications and data-center industries.
- Technology leadership: Governments may want advanced process capability, research activity and highly skilled jobs within their borders.
- National security: Officials may consider secure access to chips important for defense, infrastructure and critical systems.
- Regional development: Large fabs create construction work and can attract suppliers and training programs.
In November 2024, the U.S. Department of Commerce announced that TSMC Arizona could receive up to $6.6 billion in direct incentives under the CHIPS program. The department described the award as supporting reliable domestic supply and U.S. economic and national security. “Up to” is an award ceiling in that announcement, not evidence that the entire amount was paid or that all planned output was already operating.
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Intel’s policy page says governments increasingly adopted strategies to attract semiconductor investment as manufacturing became centralized and exposed to shocks. It also argues that sustained policy support is important for attracting capital-intensive capacity and advanced packaging. That is Intel’s policy position and should be understood as such.
6. The right geography depends on the policy goal
There is no universally optimal map of semiconductor production. The U.S. Government Accountability Office’s 2022 review interviewed 17 selected experts and found that views differed according to the priority being pursued.
GAO reported that “Geographic diversity, including production outside the U.S., might be desirable if economic competitiveness of U.S.-headquartered companies or increased supply chain resilience are priorities.” A policy centered on national security may instead place greater emphasis on domestic production. Competitiveness and resilience can favor a network of countries, while a security requirement may favor a particular national capability.
The experts recommended multiple policy responses rather than one solution. That distinction matters when evaluating announcements: a country can add a fab for strategic reasons even if another location would be cheaper, while a company can diversify internationally even when governments prefer more domestic output.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the TSMC Arizona example actually shows
TSMC announced its intention to build an Arizona fab on May 15, 2020. The company’s announcement described the project as follows:
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| Item | Announced detail | How to interpret it |
|---|---|---|
| Process technology | 5-nanometer | A specification in the 2020 plan, not a statement of current production. |
| Planned output | 20,000 wafers per month | A target for the announced facility. |
| Direct jobs | More than 1,600 high-tech professional jobs | The company’s projected direct employment. |
| Production target | 2024 | A planned start date stated in 2020; later status requires newer verification. |
| Planned spending | About US$12 billion during 2021–2029 | The company’s estimated project investment at announcement. |
| U.S. support | Up to $6.6 billion in direct CHIPS incentives announced in November 2024 | An award ceiling, not proof of full disbursement or completed output. |
This example illustrates why a company may combine commercial and public-policy motives: TSMC cited customers and partners, global talent, the U.S. workforce, the investment climate and government support. It also illustrates why dates matter. A 2020 target should not be presented as a current operating fact without a newer source.
How to judge whether a new fab really improves resilience
When comparing two announced locations, use the following questions rather than counting headlines or investment dollars.
- What technology is planned? Identify the process node, memory type, specialty process or packaging stage. A new plant may add capacity in a technology that does not replace a shortage elsewhere.
- Which customers and markets will it serve? A site aimed at local automotive, communications or data-center customers may improve regional access without supplying the entire market.
- Does it reduce concentration in the relevant technology? Geographic diversity matters only if the new site can produce a meaningful, qualified share of the needed chips.
- Are workforce, utilities and suppliers ready? Announced land or funding does not prove that power, water, equipment service and skilled labor are available.
- What incentives and investment conditions apply? Record grants or tax credits can change project economics, but they do not by themselves guarantee construction or output.
- Which policy objective is driving the project? Security, competitiveness, resilience and regional development can point to different locations.
- What is the project’s status? Separate an announcement, an incentive award, construction, equipment installation, qualification and volume production.
Why announcements often overstate what is immediately available
Fab projects are announced years before chips ship at scale. Companies may publish target technologies, capacity, jobs and spending to signal commitment, attract suppliers and support applications for public incentives. Those figures can change as demand, costs, technology road maps or permitting conditions change.
For that reason, treat planned capacity as a forecast until the company or an authoritative public source confirms construction progress and production. An incentive award is not the same as money already disbursed. A completed building is not the same as a qualified process, and qualified wafers are not necessarily volume output for every customer.
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Industry-wide counts require the same care. The Semiconductor Industry Association reported more than 100 announced semiconductor manufacturing ecosystem projects in 2024; that is an announced-project count, not a count of completed or operating fabs. Intel’s page relayed a 2025 SIA figure of $450 billion in private-sector investment and said CHIPS incentives sparked the investments. That is an attributed industry figure and claimed relationship, not an independently verified causal estimate in this article.
The trade-off: resilience costs money and adds complexity
Operating fabs across countries can reduce concentration risk, but it also duplicates expensive infrastructure and management. Companies must maintain consistent process control, transfer knowledge, train teams, manage cross-border logistics and comply with different regulations. A second site may have higher initial costs or lower utilization while it ramps.
Duplicating only the fab while leaving a critical chemical, equipment or packaging dependency concentrated elsewhere may provide less protection than expected. Resilience therefore depends on the entire chain, not just the number of wafer plants. The sources support the existence of concentration and interdependence, but they do not establish a universal percentage improvement in resilience from any particular project.
Bottom line
Chipmakers build fabs in multiple countries to spread geographic risk, stay close to customers, access talent and infrastructure, and respond to government incentives and security goals. The strategy can make some disruption scenarios less damaging, but it cannot make a globally interdependent industry independent of the rest of the world. To understand what a new fab changes, look beyond the headline: examine its technology, customers, suppliers, incentives and verified production status.
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