TSMC Gets $6.6 Billion Subsidy By US Govt For Building World's Most Advanced Semiconductors

TSMC has committed to increasing its initial investment from $40 billion to $65 billion and to constructing a third semiconductor fabrication facility (fab) in Arizona by 2030.

TSMC is the world's largest contract chipmaker and a key supplier to tech giants like Apple and Nvidia.

Source : Getty

The US Commerce Department announced on Monday that it would grant Taiwan Semiconductor Manufacturing Co.'s (TSMC) US unit a $6.6 billion subsidy for establishing advanced semiconductor production facilities in Phoenix, in the state of Arizona. Additionally, the company could receive up to $5 billion in low-cost government loans, says a report by news agency Reuters.

As part of the agreement, TSMC has committed to increasing its initial investment from $40 billion to $65 billion and to constructing a third semiconductor fabrication facility (fab) in Arizona by 2030, according to the US Commerce Department's preliminary announcement. The second Arizona fab, set to commence production in 2028, will manufacture cutting-edge 2-nanometer technology, making it one of the most advanced semiconductor facilities globally, the report added.

"These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin our economy, but frankly, a 21st century military and national security apparatus," Commerce Secretary Gina Raimondo was quoted as saying by the Reuters report.

TSMC Expects To Start Production At First US Fab By 2025

TSMC, the world's largest contract chipmaker and a key supplier to tech giants like Apple and Nvidia, had initially disclosed intentions to invest $40 billion in Arizona. The company anticipates commencing high-volume production at its inaugural US fab by the first half of 2025, as stated by Commerce.

This expansion represents a monumental foreign direct investment, with TSMC's total commitment exceeding $65 billion, making it the largest such investment in a brand-new project in U.S. history, according to the department.

To recall, in 2022, Congress passed the Chips and Science Act, allocating $52.7 billion for research and manufacturing subsidies aimed at bolstering domestic semiconductor production. Additionally, lawmakers approved $75 billion in government loan authority for this purpose.

TSMC's Arizona facility has pledged to facilitate the advancement of packaging capabilities in collaboration with US partners, enabling customers to acquire cutting-edge chips manufactured entirely within the U.S. The Commerce Department noted that 70 per cent of TSMC's clientele comprises U.S.-based companies.

TSMC CEO CC Wei expressed the company's commitment to supporting US tech firms in advancing their innovations by expanding capacity for cutting-edge technology through TSMC Arizona.

According to the Commerce Department, these initiatives are anticipated to generate 6,000 direct manufacturing positions and 20,000 construction jobs. Additionally, the department noted that 14 direct suppliers of TSMC intend to build or expand facilities in the US.