The US Department of Commerce he said on Monday that it signed an agreement to award Taiwan Semiconductor Manufacturing (TSMC) $6.6 billion in direct funding under the CHIPS and Science Act to set up semiconductor factories in Phoenix, Arizona, and provide up to $5 billion in loans.
The grant, committed to the company’s US subsidiary TSMC Arizona, is the latest step by the US to boost domestic semiconductor supply as it seeks to revive chip production amid escalating geopolitical tensions between the US and China.
The CHIPS Act, signed into law in 2022, provides for an investment of about $280 billion to boost domestic chip research and production in the US, of which about $52 billion has been earmarked to subsidize domestic chip manufacturing. In addition to national security concerns arising from semiconductors being made primarily in Asia, a big incentive for the US is to diversify semiconductor production and bring more electronics production to the West. The law is mainly aimed at attracting manufacturing state and also prohibits the recipients of the funding from increasing their semiconductor manufacturing footprint in China.
With the new investment, Taiwan-based TSMC, which is the world’s largest semiconductor producer, expands its plans for its Arizona manufacturing facilities. The company said it will build a third manufacturing facility in addition to the two currently being built, and will make advanced chips of 2 nanometers or more. The company previously said it would invest about $40 billion to set up factories in the US
TSMC said its first fab is set to start producing chips on the 4nm process in the first half of 2025. The second fab will produce 3nm and 2nm chips from 2028; and the third factory will begin making 2nm and more advanced chips near the end of the decade.
TSMC is investing more than $65 billion through these projects in the US, and the company said in a statement that the investment makes this the largest direct investment ever by a foreign entity in a greenfield project in the US
TSMC Arizona will sell its chips to its US customers, including AMD, Apple, Nvidia and Qualcomm. The company expects the three fabs to create about 6,000 high-tech, high-wage direct jobs and more than 20,000 construction jobs.
The White House last month said it signed an agreement with the Commerce Department to give Intel up to $8.5 billion to boost U.S.-based manufacturing.
Intel could receive about $20 billion in grants and loans by the CHIPS and Science Act for its semiconductor manufacturing. Meanwhile, Samsung, which announced an additional $17 billion investment in Taylor, Texas, expected to receive more than $6 billion in grants for the chip facility in Texas.
