The U.S. Commerce Department has 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. This grant is pegged for TSMC’s U.S. subsidiary, TSMC Arizona.
Latest Step in Strengthening Domestic Supply of Semiconductors
This latest move by the U.S. government is aimed at strengthening its domestic supply of semiconductors as it seeks to reshore manufacturing of chips amid escalating geopolitical tensions between the U.S. and China. The CHIPS Act, signed into law in 2022, earmarks an investment of about $280 billion to boost domestic chip research and production in the U.S.
National Security Concerns and Diversification
Besides national security concerns arising from semiconductors primarily being made in Asia, a big motivator for the U.S. is to diversify the production of semiconductors and bring more electronics production to the West. The Act is primarily aimed at attracting manufacturing stateside, and also prohibits recipients of the funding from increasing their semiconductor manufacturing footprint in China.
TSMC’s Investment in U.S. Manufacturing
With the new investment, Taiwan-based TSMC, which is the world’s largest producer of semiconductors, is broadening its plans for its fabrication plants in Arizona. The company said it would build a third fabrication unit in addition to the two being built right now, and will manufacture 2-nanometer or more advanced chips.
Timeline for TSMC’s U.S. Manufacturing Projects
TSMC had previously said it would invest about $40 billion to set up plants in the U.S. The company said its first fab unit is slated to begin producing chips under the 4nm process in the first half of 2025; the second factory will produce 3nm and 2nm chips from 2028; and the third plant will start manufacturing 2nm and more advanced chips near the end of the decade.
Job Creation and Economic Impact
TSMC is investing more than $65 billion via these projects in the U.S., and the company said in a statement that the investment makes this the largest ever direct investment by a foreign entity in a greenfield project in the U.S. TSMC Arizona will sell its chips to its U.S. customers, which include AMD, Apple, Nvidia, and Qualcomm.
The White House’s Agreement with Intel
The White House last month said it had signed an agreement with the Department of Commerce to grant Intel up to $8.5 billion to shore up U.S.-based production. Intel could receive approximately $20 billion in grants and loans from the CHIPS and Science Act for its semiconductor manufacturing.
Other Companies Receiving Funding
Meanwhile, Samsung, which announced a $17 billion additional investment in Taylor, Texas, is expected to receive more than $6 billion in grants for its chip facility in Texas. These investments are part of the U.S. government’s efforts to strengthen its domestic supply of semiconductors and reduce reliance on foreign suppliers.
Background on the CHIPS Act
The CHIPS Act aims to boost domestic chip research and production in the U.S. by investing $280 billion. About $52 billion has been set aside to subsidize domestic chip manufacturing, which is expected to create jobs and stimulate economic growth. The Act also prohibits recipients of funding from increasing their semiconductor manufacturing footprint in China.
Why Diversification Matters
Diversifying the production of semiconductors and bringing more electronics production to the West is crucial for the U.S. economy. By reducing reliance on foreign suppliers, particularly those in Asia, the U.S. can improve its national security and reduce the risk of supply chain disruptions.
TSMC’s Plans for Its U.S. Manufacturing Facilities
TSMC’s investment in the U.S. is expected to create thousands of jobs and stimulate economic growth. The company plans to build a third fabrication unit in Arizona, which will produce 2-nanometer or more advanced chips. This investment demonstrates TSMC’s commitment to expanding its manufacturing capabilities in the U.S.
Timeline for Job Creation and Economic Impact
The job creation and economic impact of TSMC’s investment in the U.S. are expected to be significant. The company plans to create thousands of jobs in Arizona, which will have a positive impact on the local economy. Additionally, the investment is expected to stimulate economic growth and improve the competitiveness of the U.S. semiconductor industry.
Conclusion
The U.S. Commerce Department’s agreement with TSMC to award $6.6 billion in direct funding is an important step towards strengthening its domestic supply of semiconductors. By investing in U.S. manufacturing, companies like TSMC can create jobs, stimulate economic growth, and improve the competitiveness of the U.S. semiconductor industry.
Additional Resources
For more information on the CHIPS Act and TSMC’s investment in the U.S., please visit the following resources:
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