TSMC Secures $6.6B Funding to Construct Chip Manufacturing Facilities Under the U.S. CHIPS and Science Act

The U.S. Department of Commerce has announced $6.6 billion in direct funding for TSMC to establish chip manufacturing facilities in Arizona.

This announcement follows Intel's recent allocation of $8.5 billion for its U.S. chip factories and GlobalFoundries' $1.5 billion funding, highlighting a substantial commitment to enhancing semiconductor manufacturing in the U.S. The urgency for such investments was underscored by a recent 7.2 magnitude earthquake in Taiwan, which exposed vulnerabilities in the semiconductor supply chain.

The Biden-Harris Administration revealed that the U.S. Department of Commerce and TSMC Arizona, a subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC), have signed a non-binding preliminary memorandum. This funding is part of the bipartisan CHIPS and Science Act, passed in 2022, which authorized $280 billion to bolster critical technology manufacturing, including semiconductors.

This funding will support TSMC's over $65 billion investment in three cutting-edge fabs in Phoenix, Arizona, which will produce the most advanced semiconductors in the world. According to Commerce Secretary Gina Raimondo, this investment aims to enhance U.S. economic and national security by creating a reliable domestic supply of chips vital for the AI boom and numerous growing sectors, including consumer electronics, automotive, the Internet of Things, and high-performance computing.

Initially planning two fabs, TSMC Arizona has committed to constructing a third fab before the decade's end. This investment will create approximately 6,000 direct jobs, more than 20,000 construction jobs, and tens of thousands of indirect jobs, thereby establishing a large-scale semiconductor manufacturing hub in Arizona.

President Joe Biden emphasized the need for the U.S. to reclaim its position in semiconductor manufacturing, stating, "America invented these chips but has seen its production share decline dramatically." He believes that the CHIPS and Science Act is crucial to reviving semiconductor manufacturing and jobs in the U.S.

Raimondo also highlighted that the CHIPS Act aims to bring advanced chip manufacturing back to the U.S. and that TSMC's investment aligns with this mission. TSMC’s Arizona fabs will help secure supply chains and create thousands of high-quality jobs in the region.

Laurie E. Locascio, Under Secretary of Commerce, underscored the importance of U.S. leadership in technologies like AI, stating that this initiative would restore the nation’s position in a foundational industry essential to the global digital economy.

TSMC, a global leader in semiconductor manufacturing, pioneered the pure-play foundry model in 1987 and now produces over 90% of the world’s advanced logic chips. In Arizona, TSMC’s fabs are expected to introduce state-of-the-art process technologies, including 4nm and 2nm nodes, with full production capacity anticipated to yield tens of millions of leading-edge chips for products like 5G smartphones and AI data center servers. The company expects high-volume production to begin in its first U.S. fab by mid-2025.

The investment places the U.S. on track to produce about 20% of the world's leading-edge chips by 2030, with TSMC Arizona's $65 billion investment standing as the largest foreign direct investment in a greenfield project in U.S. history. TSMC's efforts are catalyzing additional investments across the semiconductor supply chain, with 14 direct suppliers planning to establish or expand operations in Arizona or other U.S. locations.

Furthermore, TSMC's proposed funding includes $50 million dedicated to developing a skilled semiconductor and construction workforce. TSMC Arizona has partnered with the Arizona Building and Construction Trades Council and aims for a 15% apprenticeship utilization rate in its Phoenix construction initiatives.

To foster local talent, TSMC has established a state-supported Registered Apprenticeship program for semiconductor technicians, collaborating with universities like Arizona State University, University of Arizona, and Purdue University. Additionally, TSMC plans to capitalize on the Department of the Treasury's Investment Tax Credit, projected to be up to 25% of qualified expenditures.

In conclusion, the significant investment by TSMC in Arizona signals a revitalization of the U.S. semiconductor industry, enhancing job creation and securing critical technological capabilities necessary for future advancements.