In a landmark move aimed at bolstering domestic semiconductor manufacturing, the Biden administration announced on Monday a preliminary agreement to provide up to $6.6 billion in federal funding to TSMC's Arizona subsidiary. This funding, allocated under the U.S. CHIPS and Science Act, marks a significant step in supporting TSMC's substantial investment of over $65 billion in constructing three state-of-the-art fabrication plants in Phoenix, Arizona.
According to the terms of the nonbinding agreement, TSMC's Arizona subsidiary will receive the federal grants to facilitate the expansion of its manufacturing capabilities in the region. Additionally, the company is eligible for approximately $5 billion in proposed loans under the CHIPS Act, further bolstering its financial resources for the ambitious project.
Commerce Secretary Gina Raimondo hailed the agreement as a major milestone, emphasizing the strategic significance of partnering with TSMC to bring the manufacturing of advanced semiconductor chips to American soil. Raimondo highlighted the substantial economic and technological benefits that the collaboration is expected to yield, including job creation and the advancement of critical technologies.
The federal funds will not only support TSMC's expansion efforts but also contribute to workforce development initiatives in Arizona. A portion of the allocated funds, amounting to $50 million, will be dedicated to training and developing local talent, reinforcing the state's position as a hub for semiconductor manufacturing. Already, TSMC Arizona has generated more than 25,000 jobs and attracted 14 semiconductor suppliers to the region, underscoring the positive economic impact of the company's presence.
"It's an exciting day for Arizona, where we are leading the way in bringing the most advanced microchip manufacturing back to America," Arizona Senator Mark Kelly, a negotiator of the 2022 law stated.
Enacted in August 2022, the CHIPS Act represents a comprehensive strategy to strengthen the U.S. semiconductor industry and enhance national security. With an allocation of nearly $53 billion, the legislation provides substantial incentives for companies to expand chip production within the United States.
However, these incentives come with the condition that companies refrain from expanding certain semiconductor manufacturing operations in countries deemed a national security risk, such as China.
Raimondo emphasized the pivotal role of TSMC's investment in Arizona, characterizing it as the largest foreign investment in the state's history. The collaboration between the Biden administration, Congress, and TSMC underscores a concerted effort to regain leadership in semiconductor manufacturing and address critical supply chain vulnerabilities.
TSMC, a global leader in semiconductor fabrication, plans to leverage its Arizona facilities to produce cutting-edge chips for leading technology companies, including Apple and AMD. The expansion project aims to establish a robust manufacturing ecosystem capable of producing the world's most advanced chips, which are essential components powering emerging technologies like artificial intelligence.
The agreement with TSMC follows a series of similar initiatives aimed at revitalizing semiconductor manufacturing in the United States. In March, President Biden announced plans to allocate up to $8.5 billion in grants to Intel to support various projects across multiple states, including Arizona, Ohio, New Mexico, and Oregon. These investments underscore the administration's commitment to fostering innovation and competitiveness in the semiconductor industry.
TSMC's Arizona expansion project is expected to play a pivotal role in achieving the Biden administration's ambitious goal of producing 20% of the world's most advanced semiconductor chips domestically by the end of the decade.
Secretary Raimondo, who oversees the implementation of the CHIPS Act, acknowledges the significant challenges ahead but remains optimistic about the prospects of reshoring semiconductor manufacturing and bolstering America's technological leadership on the global stage.
