Biden administration pledges $6.6B toward U.S. microchip production

WILMINGTON, Del. — The Biden administration pledged on Monday to provide up to $6.6 billion so that a Taiwanese semiconductor giant can expand the facilities it is already building in Arizona and better ensure that the most-advanced microchips are produced domestically for the first time.

Commerce Secretary Gina Raimondo said the funding for Taiwan Semiconductor Manufacturing Co. means the company can expand on its existing plans for two facilities in Phoenix and add a third, newly announced production hub.

“These are the chips that underpin all artificial intelligence, and they are the chips that are the necessary components for the technologies that we need to underpin our economy,” Raimondo said on a call with reporters, adding that they were vital to the “21st century military and national security apparatus.”

The funding is tied to a sweeping 2022 law that President Joe Biden has celebrated and which is designed to revive U.S. semiconductor manufacturing. Known as the CHIPS and Science Act, the $280 billion package is aimed at sharpening the U.S. edge in military technology and manufacturing while minimizing the kinds of supply disruptions that occurred in 2021, after the start of the coronavirus pandemic, when a shortage of chips stalled factory assembly lines and fueled inflation.

The Biden administration has promised tens of billions of dollars to support construction of U.S. chip foundries and reduce reliance on Asian suppliers, which Washington sees as a security weakness.

“Semiconductors — those tiny chips smaller than the tip of your finger — power everything from smartphones to cars to satellites and weapons systems,” Biden said in a statement. “TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.”

Taiwan Semiconductor Manufacturing produces nearly all of the leadingedge microchips in the world and plans to eventually do so in the U.S.

It began construction of its first facility in Phoenix in 2021, and started work on a second hub last year, with the company increasing its total investment in both projects to $40 billion. The third facility should be producing microchips by the end of the decade and will see the company’s commitment increase to a total of $65 billion, Raimondo said.

The investments would put the U.S. on track to produce roughly 20% of the world’s leading-edge chips by 2030, and Raimondo said they should help create 6,000 manufacturing jobs and 20,000 construction jobs, as well as thousands of new positions more indirectly tied to assorted suppliers in chip-related industries tied to Arizona projects.

The potential incentives announced Monday include $50 million to help train the workforce in Arizona to be better equipped to work in the new facilities. Additionally, approximately $5 billion of proposed loans would be available through the CHIPS and Science Act.

The announcement came as U.S. Treasury Secretary Janet Yellen is traveling in China. Senior administration officials were asked on the call with reporters if the Biden administration gave China a head’s up on the coming investment, given the delicate geopolitics surrounding Taiwan. The officials said only that their focus in making Monday’s announcement was solely on advancing U.S. manufacturing.