US Set to Award TSMC $6.6B in Grants, $5B in Loans to Ramp Up Chip Manufacturing in Arizona
The U.S. Commerce Department announced on Monday that it has inked a deal to allocate $6.6 billion in direct funding to Taiwan Semiconductor Manufacturing (TSMC) under the CHIPS and Science Act. This funding is designated for setting up semiconductor factories in Phoenix, Arizona, with an additional provision of up to $5 billion in loans.
This grant, directed towards TSMC’s U.S. subsidiary, TSMC Arizona, marks the latest effort by the U.S. to bolster its domestic semiconductor supply chain amidst escalating geopolitical tensions with China.
The CHIPS Act, enacted in 2022, authorizes an investment of approximately $280 billion to enhance domestic chip research and production in the U.S., with a portion of about $52 billion allocated to subsidize domestic chip manufacturing. Beyond national security concerns stemming from semiconductor production primarily centered in Asia, the U.S. aims to diversify chip production and increase electronics manufacturing in the Western hemisphere. The Act is designed to incentivize domestic manufacturing while also preventing recipients from expanding their semiconductor manufacturing operations in China.
With this new investment, TSMC, the world’s largest semiconductor manufacturer, is expanding its plans for fabrication plants in Arizona. The company intends to construct a third fabrication unit, in addition to the two currently in progress, focusing on manufacturing 2-nanometer or more advanced chips. TSMC had previously announced a $40 billion investment for setting up plants in the U.S.
According to TSMC, the first fabrication unit is scheduled to commence chip production using the 4nm process in the first half of 2025, while the second factory will produce 3nm and 2nm chips starting from 2028. The third plant is expected to commence manufacturing 2nm and more advanced chips towards the end of the decade.
Through these projects, TSMC is investing over $65 billion in the U.S., marking the largest-ever direct investment by a foreign entity in a greenfield project in the country.
TSMC Arizona plans to supply chips to its U.S. customers, including AMD, Apple, Nvidia, and Qualcomm. The company anticipates that the three fabrication units will generate approximately 6,000 direct high-tech, high-wage jobs, along with over 20,000 construction jobs.
In addition to the TSMC agreement, the White House recently announced an agreement with the Department of Commerce to provide Intel with up to $8.5 billion to bolster U.S.-based production.
