The Biden administration plans to provide up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the top producer of cutting-edge microchips, aiming to bring advanced semiconductor technology to the United States.
Funded by the bipartisan CHIPS and Science Act, the grants will assist in establishing TSMC’s primary U.S. hub in Phoenix. TSMC has committed to constructing two plants at the site and will use some of the grant money to build a third factory in Phoenix. This investment will increase TSMC’s total investments in the U.S. to over $65 billion.
The Biden administration has prioritized bringing sophisticated chip manufacturing to the U.S., with TSMC planning to produce two-nanometer chips at the hub. This is a significant development as the U.S. currently does not produce the most advanced semiconductors.
Federal officials see this investment as crucial for establishing a reliable domestic semiconductor supply chain, as the majority of chip production has shifted overseas in recent years. Only a small percentage of the world’s chips are currently manufactured in the U.S.
This grant is the second-largest provided by the federal government under a program aimed at restoring the U.S.’s leadership in semiconductor manufacturing. It follows President Biden’s announcement of $8.5 billion in grants and up to $11 billion in loans to Intel, another major chipmaker.
The CHIPS Act, passed in 2022, allocated $39 billion to the Commerce Department for subsidies to incentivize companies to build and expand chip plants nationwide. This initiative is a key aspect of President Biden’s economic policy agenda focused on strengthening American manufacturing.
TSMC’s grant brings the total announced grants to over $16 billion, with additional grants expected for companies like GlobalFoundries, Microchip Technology, and BAE Systems.
In addition to grants, TSMC will receive up to $5 billion in loans from the federal government. The company is also eligible for federal tax credits covering 25% of factory construction costs. A portion of the grants will be allocated to workforce training and development.
Commerce Secretary Gina Raimondo emphasized that this investment will enable the U.S. to manufacture the most advanced semiconductors, crucial for various industries from AI to military technology.
Raimondo highlighted the national security implications of not producing advanced chips domestically, stating that this investment will address that issue.
TSMC’s expansion in the U.S. is expected to create thousands of direct manufacturing jobs and construction opportunities. The company will need to meet specific milestones before receiving payments.
Discussions about TSMC’s U.S. expansion began in 2019, with the company announcing plans for a new facility in Phoenix in 2020. The passage of the CHIPS Act further solidified TSMC’s commitment to investing in the U.S.
Despite delays in production start dates, TSMC’s expansion in the U.S. is anticipated to have a significant impact on the global semiconductor supply chain.
TSMC’s advancements in chip technology will play a key role in shaping the future of semiconductor production, with the company expected to introduce two-nanometer chips at its U.S. factories.
The competition between TSMC and Intel in manufacturing technology will likely drive further advancements in the industry, with both companies focusing on research and development to stay at the forefront.
The Biden administration is set to award additional grants to other major chipmakers like Micron Technology and Samsung as part of ongoing efforts to bolster domestic semiconductor production.
