The US plans to award Taiwan Semiconductor Manufacturing Co. $6.6 billion in grants and as much as $5 billion in loans to help the world’s top chipmaker build factories in Arizona, expanding President Joe Biden’s effort to boost domestic production of critical technology.
Under the preliminary agreement announced by the US on Monday, TSMC will construct a third factory in Phoenix, adding to two facilities in the state that are expected to begin production in 2025 and 2028. In total, the package will support more than $65 billion in investments at the three plants by TSMC, the go-to chipmaker for companies such as Apple Inc. and Nvidia Corp.
TSMC’s third fabrication site, or fab, will rely on next-generation 2-nanometer process technology, and is slated to be operational before the end of the decade. US Commerce Secretary Gina Raimondo said the 2nm chips are essential to emerging technologies including artificial intelligence, as well as for the military.
“For the first time ever, we will be making at scale the most advanced semiconductor chips on the planet here in the United States of America, by the way, with American workers,” Raimondo told reporters in a briefing ahead of the announcement. TSMC is planning to first make 2nm chips in Taiwan in 2025.
Biden’s Chips Push
US Commerce Department is divvying up $39 billion in Chips Act grants
TSMC’s award marks another milestone in Biden’s push to boost the US semiconductor industry with the 2022 Chips and Science Act. It’s one of the largest announced under the program, which set aside $39 billion in direct grants — plus loans and guarantees worth $75 billion — to persuade semiconductor companies to build factories in America after decades of shifting production abroad.
TSMC’s American depositary receipts rose as much as 2.8% Monday morning in New York to $145.35.
Intel Corp. has already inked a preliminary agreement for nearly $20 billion in grants and loans, while Samsung Electronics Co. of South Korea is expected to receive a grant of more than $6 billion. The Commerce Department has also handed three awards to companies that manufacture older-generation chips and is expected to announce a multibillion dollar package for Micron Technology Inc. in coming weeks.
Companies have announced more than $200 billion in US investments since Biden took office, with the biggest clusters emerging in Arizona, Texas and New York. The agreement unveiled Monday emerged after months of negotiations with the Commerce Department and TSMC, the world’s largest contract chipmaker by market share.
Read more: TSMC to Win More Than $5 Billion in Grants for US Chip Plant
“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” TSMC Chairman Mark Liu said in a statement.
TSMC’s work in Phoenix carries added political stakes for Biden, who defeated Donald Trump in Arizona by roughly 10,000 votes in 2020 and is seeking another win in the closely contested state to help secure reelection. Though its Arizona investment was initiated during Trump’s final year in office, TSMC’s projects in the state have become increasingly entwined with Biden’s campaign message on revitalizing the economy.
Arizona has reaped some of the biggest rewards from the Chips Act, with a massive expansion by Intel in addition to dozens of supply-chain initiatives. The TSMC grant includes $50 million in funding to train local workers, and will create 6,000 high-tech manufacturing jobs and more than 20,000 construction jobs, Raimondo said.
Read more: Biden’s $100 Billion Chips Bet Ensnared in Arizona Union Fight
The project also is expected to benefit from a tax credit for investments, according to another senior administration official, who discussed the award on condition of anonymity ahead of the announcement.
The TSMC site has seen several setbacks, including months of conflict with labor unions that resulted in delays at the first factory. The second facility, which is now slated to begin manufacturing 2nm and 3nm chips in 2028, was delayed from 2026 due to market conditions and uncertainty about levels of US government support. At least one TSMC supplier has scrapped its planned Arizona project, citing workforce difficulties.
The company has other international projects underway in Japan and Germany. TSMC held an opening ceremony this year for its Kumamoto fab, which the Japanese government is backing with subsidies.
