Biden gives TSMC over $6 billion for advanced chips in U.S.

The Biden administration announced plans to provide billions in funding to Taiwan Semiconductor Manufacturing Company to build cutting-edge chip factories in the U.S., a major development in its push to reshore advanced technology supply chains.

The Commerce Department said TSMC, which is based in Taiwan, will receive $6.6 billion in funding through the CHIPS and Science law to build three semiconductor manufacturing facilities in Arizona. Plans for two of the facilities had already been announced, but TSMC is also laying plans for a third to be completed by the end of the decade, officials said.

“For the first time ever, we will be making at scale the most advanced semiconductor chips on the planet here in the United States of America,” Commerce Secretary Gina Raimondo told reporters.

Monday’s announcement is a significant milestone in the Biden administration’s chips program and follows a $8.5 billion grant award to Intel for advanced chips.

In addition to the $6.6 billion in grants, TSMC will also receive up to $5 billion in loans as part of the agreement. The deal includes $50 million in funding to help build up the company’s semiconductor and construction workforce. TSMC brought workers from Taiwan to the U.S. to accelerate the projects in a move that angered labor unions, but in December inked an agreement with local unions to resolve disputes.

The grants and loans are fueling over $65 billion in investment from TSMC across the three factory projects, officials said.

Plans for TSMC’s second Arizona factory had been delayed amid uncertainty over federal funding. The second facility, which is expected to be completed by 2028, is intended to produce 2 nanometer processor chips that will power the most advanced technology in the future. TSMC currently produces 3 nanometer chips that are used in the latest iPhone models, one senior Biden administration official noted.

U.S. officials and lawmakers have long described the bipartisan CHIPS and Science Act as a measure to secure U.S. supply chains and outcompete China, which is investing in its own chips production. The announcement came as Treasury Secretary Janet Yellen wrapped up a visit in China to discuss disagreements over issues like overcapacity and trade. A senior Biden administration official described the TSMC announcement as “a really important moment for United States supply chain security, for United States national security.”

• A recent earthquake that impacted Taiwan underscored the fragility of the global chips supply chain, with the vast majority of advanced semiconductor production located on the island.
• Legislation to eliminate double taxation between U.S. and Taiwanese businesses sought by Taiwanese semiconductor firms is still languishing in Congress. Senate Republicans are expected to sink the broader House-passed tax package that includes the measure, Bloomberg reported.