US announces $6.6 billion subsidy for Taiwanese chipmaker

The US Department of Commerce announced on Monday that it will grant a $6.6 billion subsidy to a subsidiary of Taiwanese chipmaker TSMC for the production of advanced semiconductors in Arizona.

In addition to the subsidy, the subsidiary of Taiwan Semiconductor Manufacturing Co. will also receive $5 billion in favorable government loans.

In return, the Taiwanese company will increase its planned investment by $25 billion, to $65 billion, and build a third factory in Arizona by 2030, according to the announcement of the preliminary decision by the Department of Commerce.

In the facility expected to start operations in 2028, TSMC will produce chips based on the latest 2-nanometer technology, they added.

– These chips support the entire artificial intelligence ecosystem and are essential components for technologies needed to support our economy, but, frankly, also the military and national security apparatus of the 21st century – said Commerce Secretary Gina Raimondo.

TSMC is the largest contract chip manufacturer in the world and a major supplier to Apple and Nvidia, and it is estimated that it will begin mass production at its first factory in the US by the first half of next year.

The department stated that TSMC’s investment of over $65 billion is the largest foreign direct investment in a completely new project in US history.

TSMC Arizona has also committed to supporting the development of advanced packaging capabilities in collaboration with partners in the US to provide customers with sophisticated chips fully produced in the US.

In 2022, Congress passed the CHIPS and Science Act, which provides for $52.7 billion in subsidies for research and domestic chip production and $75 billion in favorable government loans.

The Department of Commerce expects that the projects will directly create 6,000 manufacturing jobs and 20,000 construction jobs. The factories will be built or expanded by 14 direct TSMC suppliers, they add.

TSMC’s three factories in Arizona will produce tens of millions of cutting-edge chips for 5G/6G mobile phones, autonomous vehicles, and artificial intelligence data center servers, the department emphasized.

In March, they announced $8.5 billion in grants and up to $11 billion in loans for chip production from the same program at Intel.

The company is also expected to receive $3.5 billion from the Department of Commerce to improve security in its Arizona facilities where it produces sensitive chips for the military.

The Department of Commerce will allocate $28 billion for subsidies for the production of advanced chips and also has a ‘heavy’ loan program of $75 billion.