The Biden administration will provide up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the leading maker of the most advanced microchips, in an effort to bring some of the most advanced semiconductor technologies to the United States.
The funds, which come 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 plant in Phoenix, U.S. 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 has been a major goal for the Biden administration. TSMC announced that it will now produce two-nanometer chips at the hub, a significant step forward given that the United States does not currently produce any of the most advanced semiconductors.
Federal officials see the investment as vital to 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 shifted 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 from the federal government under a program aimed at re-establishing the United States as a leader in semiconductor manufacturing. It was revealed just weeks after President Biden announced that Intel, another major chipmaker, would receive $8.5 billion in grants and up to $11 billion in loans during a tour of battleground states aimed at selling the economic of the agenda.
The CHIPS Act, which lawmakers passed in 2022, gave the Commerce Department $39 billion to distribute in subsidies to encourage companies to build and expand chip factories across the United States. The program is a key pillar of Mr. Biden’s economic policy agenda, which focuses on boosting American manufacturing.
TSMC’s award will bring total announced grants 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 equipping factories with production equipment. About $50 million of the grants will go toward training and developing the company’s workforce, federal officials said.
Gina Raimondo, the commerce secretary, 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’s a national security problem that we don’t make any of the world’s most advanced chips in the United States,” Ms Raimondo said on Sunday. “Now, because of this announcement, these brands 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.
TSMC’s investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs, federal officials said. TSMC will have to meet certain manufacturing and production milestones before payments are made.
The company has been counting on federal aid for years. Discussions about a partially subsidized expansion into the United States began in 2019, during the Trump administration, according to company officials. TSMC first announced it would build a new facility in Phoenix in May 2020, a project that company officials said would eventually require government subsidies to help offset the higher costs of building and operating chip factories in the United States.
In December 2022, several months after the CHIPS Act was passed, TSMC announced it would build a second factory at the site, increasing its total investment to $40 billion from $12 billion.
But since TSMC began construction in 2021, various obstacles have delayed the start of production. Last summer, TSMC pushed back initial production at its first plant 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 construction in 2026.
Production at the second facility is expected to begin in 2028, and production at the third plant 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 huge impact on the global semiconductor supply chain, the vulnerabilities of which have been exposed by crippling chip shortages during the pandemic.
TSMC, which pioneered the idea of ​​making chips to order for others to design them, operates huge factories in Taiwan that make the vast majority of small components that provide processing power for computers, phones, networking equipment, 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 American officials.
New generations of manufacturing technology are often described in nanometers, or billionths of a meter, a measure of the basic dimensions of the tiny circuit. In December 2022, TSMC said it will produce three-nanometer chips at its second plant in Arizona. Now it will also introduce the next generation of two-nanometer technology at the second plant, Biden administration officials announced.
Such advances determine how many transistors can be packed into each small slice of silicon, allowing chips to perform calculations faster and store more data. Over the past decade, TSMC has replaced Intel in providing the most advanced manufacturing technology, producing components that Apple designs for its latest smartphones and Nvidia develops to power artificial intelligence applications such as ChatGPT.
While the planned addition of two-nanometer technology represents a significant advance, it doesn’t necessarily mean that TSMC’s US factories will offer the latest technology at the same time as its factories in Taiwan. The company conducts research into new technologies on the island, and adapting these processes to high-volume production is usually done first in nearby buildings to speed up the transition and reduce travel time for engineers.
It remains possible that Intel, which is struggling to regain its lead in manufacturing technology, will offer the most advanced manufacturing technology in the industry by 2028 in its US factories. The company conducts 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.
