TSMC to receive $6.6 billion to boost US chip manufacturing

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By journalsofus.com

The Biden administration will provide up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Co., a leading maker of the most advanced microchips, to bring the most cutting-edge semiconductor technology to the United States.

The funding, coming from the bipartisan Chips and Science Act, will support the construction of TSMC’s first major US hub in Phoenix. U.S. officials said Sunday that the company has already committed to building two plants at the site and will use some of the grant money to build a third factory in Phoenix. TSMC will increase its total investment in the United States from $40 billion to more than $65 billion.

Bringing the world’s most sophisticated chip manufacturing to the United States has been a major goal of the Biden administration. TSMC announced that it will now produce two-nanometer chips in the hub, a significant step given that the United States currently produces none of the most advanced semiconductors.

Federal officials see the investment as crucial to building up a reliable domestic supply of semiconductors, the tiny chips that power everything from phones and supercomputers to cars and fighter jets. Although semiconductors were invented in the United States, production has largely shifted overseas in recent decades. About 10 percent of the world’s chips are made in the United States alone.

The award is the second-largest given by the federal government under a program aimed at re-establishing the United States as a leader in semiconductor manufacturing. It was unveiled just weeks after President Biden announced that Intel, another major chip maker, would get $8.5 billion in grants and up to $11 billion in loans during a tour of battleground states to sell his economic agenda.

The CHIPS Act, which lawmakers passed in 2022, gives the Commerce Department $39 billion to distribute as subsidies to encourage companies to build and expand chip plants across the United States. The program is a key pillar of Mr Biden’s economic policy agenda, which focuses on strengthening US manufacturing.

TSMC’s award will bring the total announced grants to more than $16 billion. Three small companies, GlobalFoundries, Microchip Technology and BAE Systems, received first prize.

In addition to the grant, the federal government will provide TSMC with a loan of up to $5 billion. The company is also expected to claim federal tax credits that could cover 25 percent of the costs of building factories and equipping production equipment. Federal officials said about $50 million of the grant will be set aside to train and develop the company’s workforce.

Commerce Secretary Gina Raimondo said the investment would help the United States begin manufacturing the most advanced semiconductors, which are used in artificial intelligence, smartphones and the most sensitive military hardware.

“It is a national security issue that we do not manufacture any of the world’s most sophisticated chips in the United States,” Ms. Raimondo said Sunday. “Now, because of this announcement, these chips will be made in the United States.”

Earlier this year, Ms. Raimondo said new investment in semiconductor companies would put the United States on track to produce about 20 percent of the world’s most advanced logic chips by the end of the decade.

Federal officials said TSMC’s investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs. TSMC must meet certain manufacturing and production milestones before payment can be made.

The company has been relying on federal aid for years. According to company officials, conversations about a partially subsidized expansion in the United States began in 2019 during the Trump administration. TSMC first announced it would build a new facility in Phoenix in May 2020, a project that company officials said would ultimately help address the high costs of building and operating chip plants in the United States. This will require government subsidy.

In December 2022, several months after the passage of the CHIPS Act, TSMC announced it would build a second factory on the site, increasing its total investment from $12 billion to $40 billion.

But since TSMC began construction in 2021, the start of production has been delayed due to various hurdles. Last summer, TSMC pushed back initial production at its first factory from this year to 2025, saying local workers lacked the expertise to install some of the sophisticated equipment. In January, the company said the second plant would not meet its original schedule of starting manufacturing in 2026.

According to Biden administration officials, production at the second facility is expected to begin in 2028, and production at the third factory is expected to begin by the end of the decade.

TSMC’s expansion into the United States could have an outsized impact on the global supply chain for semiconductors, the vulnerabilities of which have been exposed by chip shortages during the pandemic.

TSMC, which pioneered the idea of ​​manufacturing to order for others who design chips, operates massive factories in Taiwan that supply processing power to computers, phones, networking gear, appliances and military gear. Produces most of the smaller components. America’s reliance on the company’s factories, on an island that China does not recognize as independent and claims is part of its territory, has long worried American officials.

New generations of production technology are often described in nanometers or billionths of a meter, a measurement of the key dimensions of microscopic circuitry. In December 2022, TSMC said it would produce three-nanometer chips at its second Arizona factory. Biden administration officials announced it will now also introduce two-nanometer next-generation technology at a second plant.

Such advances limit how many transistors can be packed onto each small piece of silicon, which allows chips to perform calculations more quickly and store more data. Over the past decade, TSMC has replaced Intel in providing the most sophisticated manufacturing technology, producing the components that Apple designs for its latest smartphones and Nvidia developing AI applications such as ChatGPT. Does.

Although the plan to add two-nanometer technology represents a substantial advance, it doesn’t mean TSMC’s U.S. factories will offer the latest technology as well as its factories in Taiwan. The company conducts research on new technologies on the island, and adapting those processes for high-volume manufacturing is typically done in nearby buildings first to speed the transition and reduce travel time for engineers. Is.

It’s possible that Intel, which is racing to regain its lead in manufacturing technology, will introduce the most advanced production technology in the industry to US factories by 2028. The company conducts its manufacturing technology research in Oregon.

Biden administration officials are expected to award more grants in the coming months to other big chip makers that have invested in new or expanded domestic facilities in recent years, including Micron Technology and Samsung.

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