The U.S. Department of Commerce announced it will provide $6.6 billion in direct funding to chip maker TSMC to build chip factories in Arizona.
The news comes after last week’s announcement that Intel would receive $8.5 billion in funding for building its U.S. chip factories and the February announcement that GlobalFoundries would receive $1.5 billion.
And the award comes just after the risk to the semiconductor industry supply chain was made abundantly clear by the 7.2 magnitude earthquake in Taiwan last week.
The Biden-Harris Administration announced that the U.S. Department of Commerce and TSMC Arizona Corporation (TSMC Arizona), a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC), have signed a non-binding preliminary memorandum of termsto provide up to $6.6 billion in direct funding under the bipartisan CHIPS and Science Act, which was passed in 2022 and authorized $280 billion in funding to help bolster manufacturing of critical tech like semiconductors to the U.S.
This proposed funding would support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors.
Through this proposed investment in TSMC Arizona, Commerce Secretary Gina Raimondo said the administration would take a significant step in strengthening U.S. economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing.
After initially announcing two fabs in the U.S., TSMC Arizona is committing to build an additional third fab before the end of the decade. With this proposed funding, TSMC Arizona would be ensuring the formation of a scaled leading-edge cluster in Arizona, creating approximately 6,000 direct manufacturing jobs, more than 20,000 accumulated unique construction jobs, and tens of thousands of indirect jobs in this decade and bringing the most advanced process technology to the U.S.
“Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems. America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities. I was determined to turn that around, and thanks to my CHIPS and Science Act – a key part of my Investing in America agenda – semiconductor manufacturing and jobs are making a comeback,” said President Joe Biden, in a statement. “TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.”
“One of the key goals of President Biden’s CHIPS and Science Act was to bring the most advanced chip manufacturing in the world to the U.S., and with this announcement and TSMC’s increased investment in their Arizona campus, we are working to achieve that goal,” said Raimondo, in a statement. “The leading-edge semiconductors that will be made here in Arizona are foundational to the technology that will define global economic and national security in the 21st century, including AI and high-performance computing. Thanks to President Biden’s leadership and TSMC’s continued investments in U.S. semiconductor manufacturing, this proposed funding would help make our supply chains more secure and create thousands of good-quality construction and manufacturing jobs for Arizonans.”
Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie E. Locascio said in a statement that it’s important to the U.S. to be a leader in technologies like AI and that this effort would help restore the nation’s “leadership in an industry that is foundational to the U.S. and global digital economy.”
“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC chairman Mark Liu, in a statement. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”
TSMC is widely recognized as a global leader in semiconductor manufacturing, having pioneered the pure-play foundry business model in 1987, and now manufactures over 90% of the world’s leading-edge logic chips.
In Arizona, TSMC’s three fabs are expected to bring a suite of the most advanced process node technologies to the United States: the first fab will produce 4nm FinFET process technologies; today, TSMC Arizona announced that the second fab will produce the world’s most advanced 2nm nanosheet process technology, in addition to previously announced plans to produce 3nm process technologies; and TSMC Arizona’s third fab will produce 2nm or more advanced process technologies depending on customer demand.
At full capacity, TSMC Arizona’s three fabs would manufacture tens of millions of leading-edge chips that will power products like 5G/6G smartphones, autonomous vehicles, and AI datacenter servers. TSMC Arizona expects to begin high-volume production in their first fab in the U.S. by the first half of 2025.
Thanks to investments like those at TSMC Arizona, the United States is now on track to produce roughly 20% of the world’s leading-edge chips by 2030. With total capital expenditures of more than $65 billion, TSMC Arizona’s investment is the largest foreign direct investment in a greenfield project in U.S. history.
TSMC Arizona’s investment in the United States is catalyzing meaningful investment across the supply chain, including from 14 direct suppliers that plan to construct or expand plants in Arizona or other parts of the U.S., further strengthening U.S. domestic supply chain resilience.
The award also proposes $50 million in dedicated funding to develop the company’s semiconductor and construction workforce. To build the long-term construction workforce needed to support these projects, TSMC Arizona recently signed an agreement with the Arizona Building and Construction Trades Council. The company also plans to utilize registered apprenticeship programs to meet a 15% apprenticeship utilization rate on the Phoenix construction site.
As part of its commitment to developing local talent, TSMC Arizona established one of the first state-supported Registered Apprenticeship programs for semiconductor technicians, with support from the City of Phoenix. TSMC’s U.S.-based recruiting team is also actively collaborating with university engineering programs around the country, including Arizona State University, University of Arizona, and Purdue University, and is partnering with Maricopa Community Colleges and career technical education programs on initiatives to develop the skills for a career in the semiconductor industry.
In addition to the proposed direct funding of up to $6.6 billion, the CHIPS Program Office would make approximately $5 billion of proposed loans – which is part of the $75 billion in loan authority provided by the CHIPS and Science Act – available to TSMC Arizona under the agreement. The company has indicated that it is planning to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.