TSMC will receive $6.6 billion to bolster US chip manufacturing
The funds will help support the construction of TSMC’s first major US hub, in Phoenix.
WASHINGTON — The Biden administration will award up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Co., the leading maker of the most advanced microchips, in a bid to bring some of the most cutting-edge semiconductor technology to the United States.
The funds, which come from the bipartisan CHIPS and Science Act, will help support the construction of TSMC’s first major US hub, in Phoenix. The company has already committed to building two plants at the site and will use some of the money to build a third factory in Phoenix, US officials said Sunday. TSMC will also increase its total investments in the United States to more than $65 billion, up from $40 billion.
Federal officials view the investment as vital for building up a reliable domestic supply of semiconductors, the small chips that power everything from phones and supercomputers to cars and fighter jets. Although semiconductors were invented in the United States, production has largely shifted overseas in recent decades. Only about 10 percent of the world’s chips are made in the United States.
The award is the second largest by the federal government under a program intended to reestablish the United States as a leader in semiconductor manufacturing. Its unveiling comes a few weeks after President Biden announced that Intel, another major chipmaker, would receive $8.5 billion in grants and up to $11 billion in loans during a tour of battleground states meant to sell his economic agenda.
The CHIPS Act, which lawmakers passed in 2022, gave the Commerce Department $39 billion to distribute as subsidies to incentivize companies to build and expand chip plants across the United States. The program is a major pillar of Biden’s economic policy agenda, which is centered around strengthening US manufacturing.
TSMC’s award will bring the total announced grants to more than $16 billion. Three other smaller companies, including GlobalFoundries, Microchip Technology, and BAE Systems, received the first awards.
In addition to the grants, the federal government will provide up to $5 billion in loans to TSMC. The company is also expected to claim federal tax credits that could cover 25 percent of the cost of building and outfitting factories with production equipment. About $50 million of the grants will be set aside to train and develop the company’s workforce, federal officials said.
Commerce Secretary Gina Raimondo said the investment would help the United States start manufacturing the most advanced semiconductors, which are used in artificial intelligence, smartphones, and sensitive military hardware.
“It’s a national security problem that we don’t manufacture any of the world’s most sophisticated chips in the United States,” Raimondo said Sunday. “Now, because of this announcement, these chips will be made in the United States.”
This year, Raimondo said that new investments in semiconductor companies would put the United States on track to produce roughly 20 percent of the world’s most advanced logic chips by the end of the decade.
TSMC’s investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs, federal officials said. TSMC will have to meet certain construction and production milestones before payments are made.
The company has been counting on federal aid for years. Talks about a partially subsidized expansion in the United States began in 2019, during the Trump administration, according to company officials. TSMC first announced that it would build a new facility in Phoenix in May 2020, a project that company officials said would eventually require government subsidies to help address the higher cost of building and operating chip plants in the United States.
In December 2022, several months after the passage of the CHIPS Act, TSMC announced that it would build a second factory at the site, increasing its total investment to $40 billion from $12 billion.
But since TSMC started construction in 2021, the company has run into various stumbling blocks that have delayed the start of production. Last summer, TSMC pushed back initial production at its first factory to 2025 from this year. In January, the company said the second plant would not meet its original schedule of beginning manufacturing in 2026.