TSMC Secures $6.6B as Biden Administration Races to Dole Out CHIPS Act Funds

On Friday, the US Commerce Department announced it finalized a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Co. (TSMC) to produce semiconductors in Phoenix, Arizona -- the first award completed under the 2022 CHIPS and Science Act.

Prior to the election, during an appearance on Joe Rogan’s podcast, President-elect Donald Trump cast doubt on the CHIPS Act, calling it a “bad deal.” The act earmarks $52.7 billion to spur US semiconductor manufacturing.

TSMC, the world leader in chip production, will use the funds to bolster its $25 to $65 billion project that will see a third manufacturing facility, or “fab” built by 2030. Production of its 2-nanometer chips are slated to start in 2028 at its second facility. The company’s first Arizona fab is on track to fully open early next year, according to the company.

“Today’s final agreement with TSMC … will spur $65 billion dollars of private investment to build three state-of-the-art facilities in Arizona and create tens of thousands of jobs by the end of the decade,” President Joe Biden said in a release. “This is the largest foreign direct investment in a greenfield project in the history of the United States.”

In a statement, US Secretary of Commerce Gina Raimondo called the funding “a turning point for American innovation and manufacturing that will strengthen our economic and national security.”

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So far, $6.72 billion has been awarded and $36 billion in proposed funding allocated for projects across 20 states, with billions more planned for research and innovation. Since the beginning of the CHIPS Act, tech companies have announced more than $450 billion in private investment in domestic semiconductor production.

Uncertainty Is Testing Patience

Intel Corp., once the leader in chip manufacturing, is counting on nearly $20 billion in CHIPS Act funding to support its ambitious foundry plans that include new fabs and projects in Ohio, Arizona, Oregon, and New Mexico. The Ohio Chamber of Commerce, along with 17 other Ohio business groups, earlier this week sent a letter to Biden calling for the administration to release promised funding for the projects.

“We are grateful for your efforts to ensure these laws are enacted with clarity and expediency but are growing concerned that federal funds associated with these laws are not being distributed in a timely manner that allows the American people to fully capitalize on the opportunity to restore and expand this critical industry,” the letter said.

Other companies counting on CHIPS Act allocations include Samsung ($6.4 billion), Micron Technology ($6.1 billion), GlobalFoundries ($1.3 billion), Texas Instruments ($1.6 billion), and many other companies. The Act also earmarks $75billion in low-interest loans -- TSMC will use up to $5 billion in loans. The money will cover equipment, materials, packaging, research and development, and semiconductor manufacturing.

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“The signing of this agreement helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the US,” TSMC Chairman and CEO Dr. C.C. Wei said in a statement.