The world's largest semiconductor manufacturing specialist will spend $12 billion on a next-generation chip factory in Arizona.

Taiwan Semiconductor Manufacturing (TSM -2.40%) committed to this massive project on Friday, as the Trump administration tightened restrictions on semiconductor shipments to and from China.

A $12 billion investment

The new chip-making facility will use Taiwan Semi's advanced 5-nanometer manufacturing process. Construction is scheduled to start in 2021 and the first production runs should take place three years later. When the plant ramps up to full production volumes, TSM expects 1,600 high-tech workers at the facility to churn out 20,000 semiconductor wafers per month.

This will not be Taiwan Semi's largest production facility by a long shot. The company already has three Taiwanese chip factories with monthly capacities of at least 100,000 wafers and an even larger plant should open its doors later this year or in early 2021. All told, Taiwan Semi's production capacity adds up to 2.5 million wafers per month. American semiconductor giant Intel (INTC -0.03%) can create 817,000 wafers per month. Four of Intel's 15 global chip-making facilities can be found in Chandler, Arizona.

Automated tools making microchips out of a silicon wafer.

Image source: Getty Images.

The Arizona location will be Taiwan Semi's second North American facility, following the 1998 opening of a smaller plant in Camas, Washington. The Camas factory runs a variety of older manufacturing processes, ranging from 160 to 350 nanometers. The Arizona project gives the company a modern manufacturing option in close proximity to high-tech design centers of Silicon Valley and the Silicon Prairie.

"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," Taiwan Semi said in a written statement. "This project is of critical, strategic importance to a vibrant and competitive U.S. semiconductor ecosystem."