By Wen-Yee Lee

TAIPEI (Reuters) – TSMC’s new U.S. plant is unlikely to get the most advanced chip technology before its Taiwanese factories because of complex compliance issues, local construction regulations and various approval requirement, the CEO of the company in Taiwan.

Taiwan Semiconductor Manufacturing Co CEO and Chairman CC Wei said the construction of the new factory in Arizona took at least twice as long as in Taiwan, in comments detailing specific challenges for the US as it seeks to rebuild its domestic chip manufacturing sector.

“Each step requires a permit, and after the permit is approved, it needs at least twice as much as in Taiwan,” Wei said Thursday at an event at National Taiwan University. He added that it was therefore difficult for TSMC to use the latest technology in the US before Taiwan.

TSMC, the dominant maker of advanced chips used by companies including Apple (NASDAQ:) and Nvidia (NASDAQ:), is spending $65 billion on three giant factories in the US state of Arizona.

TSMC has said that most of its chip manufacturing will remain in Taiwan, especially for its most advanced chips.

Wei said in an earnings conference call on Thursday that, despite various challenges and rising costs, he is confident that the Arizona factory will produce the same quality chips as Taiwan, and he expects a smooth ramp-up process.

At the university event, Wei said that the lack of skilled workers and gaps in the supply chain, as well as the lack of regulations related to the construction of the chip plant, further extended the timeline for the project. in Arizona.

“We ended up establishing 18,000 rules, which cost us $35 million,” Wei said, noting that TSMC funded the hiring of a team of experts to work with the local government on regulatory issues.

He added that the cost of supplying the chemical to the US is five times that of Taiwan, leading TSMC to ship sulfuric acid from Taiwan to Los Angeles and then load it in Arizona.

Labor shortages also pose challenges, with TSMC moving half of its construction workforce from Texas to Arizona, increasing costs due to relocation and accommodation, he said.

The US government has offered full support for the investment, including a $6.6 billion grant, as it seeks to spread the risk geographically from the excessive concentration of chip manufacturing in Asia, especially Taiwan.

US Commerce Secretary Gina Raimondo said last week that TSMC has begun manufacturing advanced 4-nanometer chips for US customers in Arizona, a milestone in the Biden administration’s semiconductor efforts.