The Biden administration has finalized a deal to support Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) (TSMC), awarding it up to $6.6 billion in grants under the CHIPS and Science Act, designed to revitalize US manufacturing and reduce dependence on foreign semiconductor supply chains.
The funding will support TSMC's $65 billion investment in building three state-of-the-art semiconductor fabs in Phoenix, Arizona, with an additional $5 billion in low-cost loans also included in the deal.
TSMC’s new plants are set to manufacture some of the world’s most advanced chips, including the A16 technology, which powers devices like smartphones, autonomous vehicles, and high-performance computing systems.
The second of TSMC’s Arizona fabs, expected to begin production in 2028, will produce 2-nanometer technology, the most sophisticated chips in the world, marking a significant leap for US semiconductor manufacturing.
Per Bloomberg, TSMC is already set to receive at least $1 billion of the total funding before the year ends, having met certain project milestones.
“The Biden-Harris Administration’s investment in TSMC Arizona is a turning point for American innovation and manufacturing that will strengthen our economic and national security,” US commerce secretary Gina Raimondo said in a statement.
“The leading-edge chips that will be manufactured in Arizona are foundational to the United States' technological and economic leadership in the 21st century.”
TSMC CEO Dr C C Wei added that entering this phase of the US CHIPS Act marks a “pivotal step” in strengthening the US semiconductor ecosystem.
“The signing of this agreement helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the US,” Wei said.
TSMC’s award was finalized just weeks before the inauguration of President-elect Donald Trump, who has been critical of the CHIPS Act.
Business groups and government officials have expressed concern about potential delays in funding and the possibility of renegotiating agreements with the new administration.