The U.S. government is set to provide up to $6.6 billion in funding to Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), a major semiconductor supplier for Apple and NVIDIA, for its Arizona plants.
What Happened: The funding, a part of the U.S. CHIPS and Science Act, will bolster TSMC’s over $65 billion investment in three advanced fabrication plants in Phoenix, Arizona, CNBC reported. The company is also eligible for approximately $5 billion in proposed loans under the CHIPS Act.
U.S. Secretary of Commerce, Gina Raimondo, highlighted the significance of the agreement, stating that the partnership with TSMC will bring “the manufacturing of the world’s most advanced chips to American soil.”
Raimondo further revealed that the funds will include $50 million to train and develop local talent in Arizona. TSMC Arizona has already created more than 25,000 jobs and attracted 14 semiconductor suppliers for the state.
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The CHIPS Act, passed in August 2022, is a nearly $53 billion package aimed at building the U.S. domestic chip industry to boost the economy and better compete with rivals such as China for national security purposes.
Other companies that have received funding under the CHIPS Act include GlobalFoundries, Microchip, BAE Systems, and Intel, which was awarded up to $8.5 billion in indirect funding and up to $11 billion in loans last month.
Why It Matters: TSMC’s financial boost is part of a broader strategy to secure the semiconductor supply chain within the United States. Previously, TSMC was expected to win up to $5 billion in grants for a chip fabrication facility in Arizona to meet the demands of major clients like Apple and Advanced Micro Devices (AMD).
Moreover, TSMC’s global expansion and its role in the artificial intelligence (AI) boom have been in the spotlight. However, the company’s rapid growth has also raised concerns about overreliance on a single manufacturer for advanced chips.
The recent 7.2 magnitude earthquake in Taiwan that forced TSMC to halt production underscored the risks of concentrated manufacturing locations.
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