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Chipmakers put fabs in multiple countries because no single location optimizes every requirement. A second or third site can reduce exposure to a regional shock, place production nearer important customers, widen access to skilled workers and suppliers, and qualify for government support. It does not make the semiconductor industry self-sufficient: modern chips still depend on equipment, materials, design, packaging, logistics and expertise spread across many countries.
The basic reason: balance resilience with business reality
A semiconductor fab is an enormous, long-lived investment. Building one usually takes years, requires highly specialized equipment and utilities, and commits a company to a regional workforce and supplier network. Concentrating all that capacity in one country can be efficient, but it also creates a single point of exposure. A natural disaster, power or water shortage, trade restriction, pandemic disruption or military crisis in that area could affect many customers at once.
Putting fabs in more than one country is therefore a form of risk management. If a second site has suitable technology, qualified staff, dependable utilities and the rest of the supply chain behind it, customers may have another source of wafers when one region is disrupted. The benefit is a reduction in concentration risk, not a guarantee that production can instantly move from one site to another.
The United Kingdom’s National Semiconductor Strategy (2023) describes thousands of production stages distributed around the world, with much manufacturing concentrated in East Asia, particularly Taiwan. It 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 same strategy cautions that no country can achieve complete autonomy and that resilience cannot be added quickly.
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Why a company chooses a second country
1. Reduce exposure to a concentrated region
Geographic concentration magnifies local problems. A disruption in a major manufacturing cluster can affect foundries, component makers, assemblers and customers simultaneously because they share ports, utilities, specialist labor and transport routes. Intel has similarly argued that semiconductor manufacturing became highly centralized and vulnerable to shocks.
Diversification gives a producer and its customers an alternative location, but only when the alternative is genuinely usable. A fab making a different process node or product cannot automatically replace another fab’s output. The replacement site also needs compatible chemicals, gases, silicon wafers, spare parts, equipment servicing, packaging and testing. If those inputs still come from the disrupted region, the apparent geographic hedge may be smaller than it looks.
2. Serve customers and partners in their own regions
Foundry customers may value having production capacity in a market where they design products, operate factories or face regulatory requirements. A local site can make collaboration easier, provide engineering support in a nearby time zone and give customers another geographic source for selected products.
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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesWhen TSMC announced its Arizona project on May 15, 2020, it said the facility would “better support our customers and partners” and give the company more opportunities to attract global talent. It also said leading U.S. companies could fabricate cutting-edge products in the United States, near a foundry and its surrounding ecosystem. That is the company’s stated rationale; it does not establish that every customer requires local manufacturing or that every shipment will be faster.
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3. Reach talent, infrastructure and suppliers
Fabs require process engineers, equipment technicians, construction specialists, software staff, safety professionals and operators. Companies compare the depth of local talent with the ability to recruit internationally and train new workers. They also assess electricity quality, water availability, industrial land, high-purity gases, chemical handling, waste treatment, roads, ports and nearby equipment suppliers.
TSMC cited a talented U.S. workforce, opportunities to attract global talent and the U.S. investment climate when explaining its Arizona plan. These factors help explain why a company may operate in several countries even when one country already hosts its most experienced manufacturing cluster: different regions offer different combinations of skills, infrastructure and ecosystem support.
4. Improve the economics of a very expensive project
Location affects construction costs, taxes, financing, energy prices, labor costs, permitting timelines and the availability of industrial infrastructure. A company may accept higher operating costs in one country if the site provides strategic customer access, a stronger workforce or a more stable long-term business environment. Conversely, a lower-cost location may be unattractive if it lacks reliable utilities or the specialists needed to run advanced equipment.
Government incentives can change that calculation, but they are one factor rather than a complete explanation. Companies still need sufficient demand, technical feasibility and a supply chain capable of supporting production for decades.
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Why governments encourage fabs on their territory
Public policy adds another layer to location decisions. Governments may want local capacity to improve supply reliability, preserve technological capability, attract high-value investment, create skilled jobs and reduce dependence on a small number of overseas production clusters.
The U.S. Department of Commerce said in November 2024 that TSMC Arizona could receive up to $6.6 billion in direct CHIPS incentives. The department framed the award as a way to strengthen 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.
Policy priorities do not always point to the same geography. The U.S. Government Accountability Office’s 2022 review interviewed 17 selected experts and 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 stronger domestic-production focus may instead follow a national-security objective. The experts recommended multiple policy responses because no single measure addresses every risk.
Intel’s supply-chain policy page says governments increasingly adopted strategies to attract semiconductor investment as manufacturing became centralized and vulnerable to shocks. It also presents sustained policy support as important for attracting capital-intensive manufacturing and advanced-packaging projects. That is Intel’s policy position, not proof that subsidies alone determine where every fab is built.
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What a second fab can—and cannot—secure
It can lower single-site dependence
If two sites can make compatible products and both have dependable supporting inputs, a disruption at one site need not remove all available capacity. Geographic spread can also make it easier to adjust production between markets when demand changes.
It cannot create national self-sufficiency
A country with a new fab may still import chip designs, lithography and other manufacturing equipment, specialty chemicals, wafers, electronic-design software, packaging services and test capacity. Semiconductor production is a chain of interdependent stages, not a single building. The 2023 UK strategy explicitly says that no country can achieve autonomy.
It cannot guarantee immediate substitution
Process recipes, equipment configurations, qualification data and customer designs are site-specific. Moving a product to another fab can require engineering work, reliability testing and customer approval. Capacity may also be fully booked. A geographically diverse network is a hedge that takes time to build and qualify, not an emergency switch.
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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →TSMC’s Arizona announcement: a dated example
TSMC announced its intention to build an Arizona fab on May 15, 2020. The figures below are the company’s targets and estimates from that announcement, not a statement of present-day production status.
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| Item | 2020 announced plan | How to read it |
|---|---|---|
| Technology | 5-nanometer process | A planned process capability at the time of the announcement |
| Target output | 20,000 wafers per month | Planned monthly capacity, not verified current output |
| Direct jobs | More than 1,600 high-tech professional jobs | Company estimate for direct employment |
| Production target | 2024 | The schedule stated in 2020; later status requires newer confirmation |
| Planned spending | About US$12 billion during 2021–2029 | Company estimate for the project period |
| Public support announced in 2024 | Up to $6.6 billion in direct CHIPS incentives | Commerce Department award ceiling, not proof of full disbursement |
This example shows why announcements must be separated from outcomes. Planned capacity, construction progress, an incentive award and wafers actually produced are different facts. A headline about a new fab does not by itself prove that a country has gained operating capacity or that customers can immediately shift orders there.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to judge whether a new location improves resilience
When comparing two announced sites, examine the details rather than counting buildings or press releases.
- Identify the technology. Check which process nodes, memory products, power devices or other technologies are planned. A new site matters only to the products it can make.
- Identify the manufacturing stage. Distinguish wafer fabrication from assembly, packaging and testing. These stages may be in different countries and each can become a bottleneck.
- Ask which customers and markets it serves. A site aimed at local customers may improve regional access without replacing capacity for customers elsewhere.
- Test the concentration claim. Determine whether the site adds meaningful capacity outside the existing cluster or merely duplicates a small part of the same network.
- Check the enabling ecosystem. Look for available workers, reliable electricity and water, specialty-material suppliers, equipment service, logistics and nearby packaging and testing.
- Separate policy goals. Note whether the stated objective is national security, competitiveness, economic development, supply resilience or a combination. Those goals can favor different geographic choices.
- Classify the status. Label the project as announced, funded, under construction, installing equipment, qualified or in production. Do not treat these stages as interchangeable.
The scale of the investment and the limits of the numbers
| Figure | Owner and date | What it represents |
|---|---|---|
| More than 10,000 suppliers | Intel supply-chain policy page; date not specified | Intel’s own supply chain, not the semiconductor industry as a whole |
| $450 billion in private-sector investment | Semiconductor Industry Association, 2025, as cited by Intel | An SIA-reported figure that Intel says followed CHIPS incentives; the cited material does not independently verify causation |
| 17 selected experts | U.S. Government Accountability Office, 2022 | The size of GAO’s interview sample, not a representative industry survey |
| More than 100 announced ecosystem projects | Semiconductor Industry Association, 2024 | Announced projects, not more than 100 completed or operating fabs |
These figures illustrate the capital and coordination involved, but they should not be combined into a single measure of security. There is no comparable country-by-country global fab-capacity percentage established by these sources, so a qualitative description of East Asian concentration is more defensible than an unsourced current ranking.
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The trade-offs of operating across borders
- Higher complexity: Multiple sites require parallel management systems, engineering coordination, quality control and compliance with different laws.
- Duplicated investment: Buildings, clean rooms, utilities and training may need to be funded in more than one location, even when each site is not fully interchangeable.
- Uneven efficiency: A mature, dense cluster can have lower costs and faster problem-solving than a newer site that is still building its supplier base.
- Workforce pressure: Rapid expansion can create shortages of experienced technicians and engineers, forcing companies to move staff or lengthen training.
- Continuing cross-border dependence: New fabs still rely on international equipment, materials, software, logistics and downstream partners.
- Policy uncertainty: Incentives, export controls, tax rules and security requirements can change over a project’s lifetime.
For those reasons, geographic diversification is best understood as one layer in a broader resilience strategy. Stockpiles, supplier visibility, alternative packaging and testing, qualified backup processes and clearer market information may be needed alongside new fabs.
What “more secure chips” really means
A multi-country manufacturing network can make some disruption scenarios less damaging, especially when the additional site has qualified capacity and independent supporting infrastructure. It does not eliminate shortages, guarantee access to every type of chip or sever the industry’s international dependencies. Security depends on the specific technology, the stage of production, the available capacity and the resilience of the suppliers around each fab.
The practical test is therefore not “Does this country have a fab?” but “Which products can this fab make, at what qualified volume, with which inputs, for which customers, and how quickly could another site cover a disruption?” That question reflects why chipmakers continue to build across borders even while governments pursue domestic capacity: resilience, customer service, talent, economics and national policy all matter at once.
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