U.S. to Award TSMC $6.6 Billion for Arizona Chip Factories

U.S. to Award TSMC $6.6 Billion for Arizona Chip Factories

The Biden administration has announced a preliminary agreement to provide Taiwan Semiconductor Manufacturing Company (TSMC) with up to $6.6 billion in direct funding for its Arizona subsidiary. This funding, part of the $53 billion CHIPS and Science Act, aims to bolster the U.S. semiconductor industry and reduce reliance on foreign manufacturers.

TSMC, the world's largest contract chipmaker, plans to invest more than $65 billion in three state-of-the-art fabrication plants in Phoenix, Arizona. The company's commitment to expanding its U.S. operations aligns with the Biden administration's goal of bringing advanced chip manufacturing back to American soil.

The proposed funding would be provided in stages as TSMC achieves negotiated milestones and is subject to due diligence by the Commerce Department. In addition to the direct funding, TSMC Arizona is also eligible for approximately $5 billion in proposed loans under the CHIPS Act. The company plans to claim the Department of the Treasury's Investment Tax Credit, which could be up to 25% of qualified capital expenditures.

U.S. Secretary of Commerce Gina Raimondo emphasized the significance of this partnership, stating that it will bring "the manufacturing of the world's most advanced chips to American soil". The advanced chips produced at TSMC's Arizona facilities will power cutting-edge technologies such as artificial intelligence, high-performance computing, and 5G/6G communications.

The investment is expected to create approximately 6,000 direct manufacturing jobs, more than 20,000 construction jobs, and tens of thousands of indirect jobs in the coming decade. TSMC has already attracted 14 direct suppliers to construct or expand plants in Arizona and other parts of the U.S., further strengthening the domestic supply chain. The agreement also includes $50 million in dedicated funding to develop the company's semiconductor and construction workforce.

TSMC's Arizona investment is part of a broader effort by the U.S. government to revitalize the domestic semiconductor industry. The U.S. share of global chip manufacturing fell from 37% in 1990 to just 12% in 2020. With projects like TSMC's, the country is now on track to produce roughly 20% of the world's leading-edge chips by 2030.

As the global demand for semiconductors continues to grow, securing a reliable domestic supply chain has become a top priority for the United States. The partnership between the U.S. government and TSMC represents a significant step towards achieving this goal and ensuring the country's economic and national security in the years to come.

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