Speaker 1: On 1,100 acres in the middle of the Arizona desert, only one set of buildings rises above the horizon, as far as the eye can see.

Speaker 2: We started construction well before the Chips Act came along, and that's in April of 21.

Speaker 1: This recently completed 3.5 million square foot building is Taiwan Semiconductor Manufacturing Company's first Arizona Chip Fabrication Plant, or FAB, making history not only for its enormous size, but because it's by far the most advanced chip fab on U.S. soil. So pilot production has started in this building. When we were here three years ago, it was steel beams and dirt. What kind of investment has it taken to get to this point?

Speaker 2: About $20 billion.

Speaker 1: When we first visited, TSMC was far from a household name. But the chip shortage and AI boom has thrust it into the spotlight. TSMC manufactures some 92 percent of the world's most advanced chips in everything from NVIDIA GPUs to Apple iPhones. And now, for the first time in history, TSMC is starting to make those advanced chips here in the U.S. Customers like Apple are starting to make their chips here, with two more FABs planned by the end of the decade.

Speaker 2: The facility over here is our FAB 2. You can see the steel has been completed.

Speaker 1: But bringing advanced chip manufacturing to the U.S. has proven difficult. Volume production supposed to begin this year is delayed until 2025. The Commerce Department recently hit TSMC with new shipping bans after its chips ended up in Huawei devices despite export controls. And incoming President Donald Trump stirred up fears when he expressed opposition to the CHIPS Act during his campaign. TSMC is getting $6.6 billion from the bill.

Speaker 3: The CHIPS Act was bipartisan. It had huge Republican support when it passed. Right now, we buy every single AI chip from one company in Taiwan. That makes America less safe. And so repealing the CHIPS Act would make Americans less safe. I just don't think they'll do that.

Speaker 1: CNBC visited northern Phoenix for an exclusive first look at TSMC's first completed FAB and asked its top executives exactly what's in store for U.S. manufacturing under an incoming Trump administration and ever-mounting need for advanced chips. Inside the huge new FAB just completed in Arizona, there's enough concrete to make 10 Empire State Buildings, over 15 million feet of cable and wire that could stretch from New York City to Los Angeles, and steel that weighs as much as 970 Boeing 777s. Now pilot production is officially underway.

Speaker 2: Running actual product through to make sure that the entire line works end-to-end, and then you use those wafers to sample the customer so that they can decide if we've met their standards.

Speaker 1: Now chairman of TSMC Arizona, Rick Cassidy has been with the company 27 years. And how close are we to full production in this building?

Speaker 2: Very close, very close.

Speaker 1: But according to TSMC's initial timeline, full production should already be happening.

Speaker 4: Getting the right talent, and of course doing so during a pandemic when there was shortages, you couldn't build a house, let alone build a chip foundry.

Speaker 5: It gives you some idea for like what is required to build like massive scale in this industry. Like it's not a game for sissies. Like it's hard and it's expensive.

Speaker 2: When we came to the U.S., we knew we were going to go through a learning process. And I want to tell you, no surprise, we had a lot of learning that we went, whether it was permitting, learning how to work with the trades, learning how to work with the unions, local labor laws, lots of learnings that went on. Now we've overcome those. But maybe the biggest challenge that we had was MEP, mechanical, electrical and plumbing.

Speaker 1: The fab is filled with billions of dollars of machinery operating at the very edge of what's scientifically possible, like these bus-sized EUV machines made by a single company, ASML, the only machines in the world able to perform the extreme ultraviolet lithography necessary for etching minuscule designs on the most advanced chips.

Speaker 2: So these are quarter billion dollar tools. In order to hook one up requires something over 2,000 electrical connections, over two kilometers of cabling, 100,000 parts, 40,000 bolts. We're talking about massive. So learning how to overcome that challenge was something that was good for TSMC, good for the trades, good for Phoenix, good for the U.S. And yes, we're dang near back on the original schedule.

Speaker 1: So far, TSMC has 2,000 people working around the clock to run the operation. Cassidy showed us the gowning building where workers suit up in ultra sterile bunny suits before crossing a sky bridge into the new fab.

Speaker 2: Dust particles are the bane of wafer fabrication. If it lands on a wafer, it'll kill or die.

Speaker 1: And what kind of yield are you anticipating to get out of Fab One?

Speaker 2: You know, yields vary, but we intend to be right on par with our Taiwan compatriots.

Speaker 1: The yield, what percentage of chips coming out of the fab are usable, depends on that sterile environment and precision of the machines. But even with great yields, the biggest volume of chips will still come out of Taiwan for years to come. So the U.S. is far from self-reliant.

Speaker 5: It's difficult or impossible for the U.S. or any country to be fully self-sufficient in everything that they need to build semiconductors. I think that's a pipe dream.

Speaker 1: And although the first fab was originally slated to make 5 nanometer, it's now on track to pump out even more advanced 4 nanometer chips at a rate of at least 20,000 wafers per month. Wafers that cost upwards of $18,000 and continue to rise in price, taking TSMC's stock value with it over the past couple of years.

Speaker 4: We've seen TSMC been able to kind of name its price and everyone's going to pay it because right now it's the dependability and the quality that is needed.

Speaker 1: Despite being the birthplace of microchips in the 1950s and remaining a top chip design hub, the U.S. now manufactures only 10 percent of the world's chips and none of the most advanced ones. When supply chain chaos collided with booming demand for consumer electronics during the pandemic, the resulting chip shortage exposed the big risks of relying on outsiders for such critical technology. How important is it for supply to come from elsewhere than just Taiwan?

Speaker 2: I think the pandemic is probably a good example that highlighted supply chain diversification requirements. And customers want us in the U.S., they want us in Japan, they want us in Europe.

Speaker 1: Talks with TSMC about bringing advanced production to the U.S. actually began in 2018 under President Trump's first term and his then Commerce Secretary Wilbur Ross.

Speaker 6: Well, it began with SelectUSA, which is an annual event that the Commerce Department puts on to encourage U.S. investment by foreign companies. TSMC came to that session.

Speaker 1: TSMC has actually been manufacturing in the U.S. since 1998 at an older generation chip fab in Washington state, where Cassidy says TSMC is currently investing to upgrade and expand. But Ross says some major customers wanted advanced chips made on U.S.

Speaker 6: soil. I set up a phone call between the chairman of TSMC and the head of Apple, where Apple became very strongly supportive of the idea of TSMC coming.

Speaker 1: By 2020, TSMC announced its Arizona plans, then broke ground there in April 2021. And now you've got, you know, an atrium and building and you'll be seeing all of the fab in the back. 26-year company veteran Rose Castanares is the newly appointed president of TSMC Arizona.

Speaker 7: It was one of my customers that had first requested that TSMC build a fab in the United States. They wanted supply resilience.

Speaker 1: The world's massive reliance on TSMC's fabs in Taiwan has made the global chip supply vulnerable to risks of the region.

Speaker 4: We can't be sure that we can make enough chips here in the U.S. in the event of, say, some sort of aggression between China and Taiwan, some sort of even earthquakes and events that take down that particular island for a period of time. The entire market, the entire world could suffer from lack of availability of leading edge nodes.

Speaker 1: A deadly 7.4 magnitude earthquake in April briefly halted production and led to a $92 million loss for TSMC.

Speaker 2: We're used to earthquakes. We are well prepared for earthquakes. We build for earthquakes. We've overbuilt this structure because we use the same designs as in Taiwan.

Speaker 1: Relying on chips from Asia has also kept the U.S. from full control over its position in the constant race for technological dominance.

Speaker 4: Being the global technology leader in AI is the most important thing to preserve over the next two decades for economic prosperity.

Speaker 1: That's why President Biden has hit the chip industry with export controls meant to keep China from pulling ahead with advanced tech. But in October, TSMC alerted the U.S. that some of its chips were spotted in Huawei devices, despite bans on selling to the Chinese company.

Speaker 4: This problem is as old as time. There's a lot of complex rerouting of goods to different countries that have limited access to leading edge or the most advanced technology. But, of course, TSMC, big, successful company, supposed to be a good partner to the U.S. It is seen as extra problematic that that happened. And, of course, that's going to be monitored very carefully.

Speaker 2: We stopped shipment right on schedule. We're very law abiding.

Speaker 1: Just down the road in Chandler, Arizona, another chip giant, Intel, is also building two huge new fabs. The U.S. company's business model is far different, designing and manufacturing its own chips, while TSMC is what's known as a pure play foundry, only manufacturing chips for others. Cassidy says the relationship between the two is solid.

Speaker 2: We meet with them weekly. And the feedback is we're helping them increase their ranks. We're helping them train on the most advanced stuff. So I think they're pretty happy with what we're doing.

Speaker 1: Both companies have delayed the timelines for full production at their new Arizona fabs. But where TSMC has remained the uncontested leader in advanced chips, Intel has stumbled time and again.

Speaker 5: They're in a tough spot, you know, and I don't want to see Intel go under like we need Intel.

Speaker 1: Intel is the largest recipient of funds from the $52 billion dollar Chips Act signed by President Biden in 2022, meant to offset the incredible cost of building a fab to make chips in the U.S. TSMC has said the cost of U.S. construction could be at least four times what it would cost in Taiwan. Once complete, TSMC estimates all three fabs will cost $65 billion.

Speaker 7: If you take a look at the State Farm Glendale Stadium, that was roughly about $500 million. That $65 billion that we're committed to do on this site for three fabs means 130 Glendale stadiums. And that's a huge number.

Speaker 1: In November, after some complaints over delays, the Commerce Department finalized $7.9 billion for Intel and days before $6.6 billion for TSMC.

Speaker 3: So their deal is done, completed. They're expanding hugely in Arizona. It's incredibly exciting.

Speaker 1: The race to complete the Chips Act deals has sped up in the weeks since the election. Trump criticized the Chips Act as so bad in October, suggesting tariffs could be the answer instead.

Speaker 7: If there are tariffs, that will affect our customers, consumers and the broader economy. And we're at the foundational part of that economy where we are building chips that power data centers and computers and phones. So in that respect, everyone will be affected as well as TSMC.

Speaker 1: While federal funds start getting doled out to TSMC, Intel and other recipients like Samsung, Micron, Global Foundries and Texas Instruments, they'll also be competing for another scarce resource in the U.S. chip industry, workers.

Speaker 7: When we finished the construction of this fab, it was really the first advanced manufacturing fab that had been built in the United States for at least 10 years. And semiconductors is a very, very tough technology. You have to build upon what you learned in the previous node. And so once you stop with one particular node, you don't have the learnings to continue. The experience is just not here in the United States.

Speaker 1: So TSMC sent some 600 engineers to train in Taiwan, like Jeff Potts, who left in 2021 for an 18-month stint there.

Speaker 8: At the time, there was no facility in Arizona. And the purpose was to go and actually make things, right, and learn how they're made. So you have to have a kitchen to cook, like to physically touch the $200 million piece of equipment. Like you can't do that anywhere other than at the fab in Taiwan.

Speaker 1: Now, Potts has had the chance to see the EUV machines inside the new fab in Arizona, too.

Speaker 8: I went in once very recently, and I think the three to six month gap of when I was on the construction team to where we are now, I think was astounding. It's like, oh, it looks like it did in Taiwan.

Speaker 1: TSMC plans to hire at least 6,000 workers by the time all three fabs are complete at the end of the decade.

Speaker 7: For engineers, we are actively recruiting at universities in Arizona and all across the U.S. ASU even has what they call a TSMC day.

Speaker 1: TSMC has also brought experts over from Taiwan on three-year temporary assignments.

Speaker 8: Getting to meet like 20, 30-year-old industry veterans that brought us down from micron scale to nanometer scale and get to have conversations with them about how we were going to do that in the U.S., we've brought that to Arizona. The biggest culture difference is Hawaiian shirt Fridays. So we don't have that in Taiwan. Arizona, we have.

Speaker 1: Water scarcity, meanwhile, is something Taiwan and Arizona have shared. A recent drought in Taiwan means TSMC is no stranger to recycling the massive amount of water it needs to make chips. TSMC says it will take 4.7 million gallons of water daily to run the first Arizona fab. But it'll bring that demand down to one million gallons a day by recycling some 65 percent of that.

Speaker 2: We are working on an IRWC, an industrial reclamation water center. When we get that in place, we will have near zero discharge to waste, which means basically the only water we'll lose is through evaporation.

Speaker 1: Another concern, the massive amount of power it takes to make chips. TSMC did build solar on site, but it's not nearly enough to cover the 2.85 gigawatt hours per day needed by the first fab, equivalent to the power used by roughly 100,000 U.S. homes. TSMC says it's purchasing renewable energy credits to offset all that. Still, amid the AI fuel data center boom, Arizona's largest utility warned it could run out of transmission capacity before the end of the decade. That's also when TSMC plans to start production at its third Arizona fab.

Speaker 2: Fab three, which you can't see, it's down this way, is probably going to be two nanometer and more advanced.

Speaker 1: The most advanced in the world.

Speaker 2: Most advanced in the world.

Speaker 1: Its global ambitions also reach far beyond Arizona. TSMC opened its first fab in Japan in February, broke ground on an $11 billion fab in Germany in August, and has been in talks about building in the United Arab Emirates, although nothing is concrete as TSMC navigates export controls on its chips into China, a UAE trading partner. Within the U.S., TSMC's plans are likely to grow, too. What about other fabs in the future? There's space, right?

Speaker 2: Well, there's space for more. I don't want to speculate on what the future might bring, but we've got 1,100 acres here plus, so there's room for lots of fabs.