The Biden administration will award up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the leading maker of the most advanced microchips, in a bid to bring some of the most cutting-edge semiconductor technology to the United States .
The funds, coming from the bipartisan CHIPS and Science Act, will help support the construction of TSMC’s first major hub in the US, in Phoenix. 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, US officials said Sunday. TSMC will also increase its total investment in the United States to more than $65 billion, up from $40 billion.
Bringing the world’s most sophisticated chip manufacturing to the United States is a key goal for the Biden administration. TSMC announced that it will now produce two-nanometer chips in the hub, a significant step forward given that the United States currently produces none of the most advanced semiconductors.
Federal officials see the investment as essential for building 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 moved overseas in recent decades. Only about 10 percent of the world’s chips are made in the United States.
The award is the second largest by the federal government under a program intended to re-establish the United States as a leader in semiconductor manufacturing. It was announced weeks after President Biden announced that Intel, another major chip maker, would receive $8.5 billion in grants and up to $11 billion in loans during a tour of battleground states aimed at selling his economic agenda.
The CHIPS Act, passed by lawmakers in 2022, gave the Commerce Department $39 billion to distribute in 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 centers on boosting American manufacturing.
TSMC’s award will bring total announced awards to more than $16 billion. Three smaller companies, GlobalFoundries, Microchip Technology and BAE Systems, received the first awards.
In addition to the grants, the federal government will provide up to $5 billion in loans to TSMC. The company is also expected to claim federal tax credits that could cover 25 percent of the cost of building and renovating factories with production equipment. About $50 million in grants will be allocated to train and develop the company’s workforce, federal officials said.
Gina Raimondo, the commerce secretary, said the investment would help the United States begin producing the most advanced semiconductors, which are used in artificial intelligence, smartphones and the most sensitive military hardware.
“It’s a national security problem that we don’t make any of the world’s most sophisticated chips in the United States,” Ms. Raimondo on Sunday. “Now, because of this announcement, these chips will be made in the United States.”
Earlier this year, Ms. Raimondo said new investments in semiconductor companies will 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.
TSMC’s investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs, federal officials said. TSMC must meet certain construction and production milestones before payments are made.
The company has relied on federal aid for years. Talks about a partially subsidized expansion in the United States began in 2019, during the Trump administration, according to company officials. TSMC first announced that it would build a new facility in Phoenix in May 2020a project that company officials say will eventually require government subsidies to help meet the higher cost of building and operating chip plants in the United States.
In December 2022, a few months after the passage of the CHIPS Act, TSMC announced that it would build a second factory at the site, increasing its total investment to $40 billion from $12 billion.
But since TSMC started construction in 2021, various obstacles have delayed the start of production. Last summer, TSMC pushed back initial production at its first factory to 2025 from this year, saying local workers lacked the expertise to install some sophisticated equipment. In January, the company said the second plant would not meet its original schedule of starting manufacturing in 2026.
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, according to Biden administration officials.
TSMC’s expansion into the United States could have a major impact on the global supply chain for semiconductors, the weaknesses of which have been revealed by crippling chip shortages during the pandemic.
TSMC, which pioneered the idea of manufacturing chips to order for others to design them, operates large factories in Taiwan that turn out most of the small components that power the processing power of the devices. computers, telephones, networking gear, appliances and military equipment. America’s reliance on the company’s factories, on an island that China does not recognize as independent and claims as part of its territory, has long worried US officials.
New generations of production technology are often described in terms of nanometers, or billionths of a meter, a measure of the basic dimensions of microscopic circuitry. In December 2022, TSMC said it will produce three-nanometer chips at its second factory in Arizona. It will also now introduce the next generation of technology, at two nanometers, in a second plant, Biden administration officials announced.
Such advances determine how many transistors can be packed into each small slice of silicon, allowing the chips to perform calculations faster and store more data. Over the past decade, TSMC has replaced Intel in delivering the most sophisticated production technology, producing components designed by Apple for its latest smartphones and developed by Nvidia to power artificial intelligence applications such as ChatGPT .
While the planned addition of two-nanometer technology represents a major advance, it does not mean that TSMC’s US factories will offer the latest technology at the same time as its factories in Taiwan. The company conducts research on new technologies on the island, and adapting those processes to high-volume manufacturing is usually done first in nearby buildings to speed up the move and reduce travel time for workers. engineer
It remains possible that Intel, which is racing to regain its lead in manufacturing technology, will offer the industry’s most advanced production technology by 2028 in US factories. The company conducts its manufacturing technology research in Oregon.
Biden administration officials are expected to award more grants in the coming months to other major chipmakers that have invested in new or expanded domestic facilities in recent years, including Micron Technology and Samsung.
