US finalizes up to $6.6 bn funding for chip giant TSMC

The United States will award Taiwanese chip giant TSMC up to $6.6 billion in direct funding to help build several plants on US soil, officials said Friday, finalizing the deal before a new administration enters the White House.

"Today's final agreement with TSMC –- the world's leading manufacturer of advanced semiconductors –- will spur $65 billion dollars of private investment to build three state-of-the-art facilities in Arizona," said President Joe Biden in a statement.

The Biden administration's announcement comes shortly before President-elect Donald Trump takes office. Trump has recently criticized the CHIPS Act, a major law passed during Biden's tenure aimed at strengthening the US semiconductor industry.

While the US government has unveiled over $36 billion in grants through this act, including the award to TSMC, much of the funds remain in the due diligence phase and have not been disbursed.

But once a deal is finalized, funds can start flowing to companies that have hit certain milestones.

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TSMC is the second company after Polar Semiconductor to finalize its agreement.

"Currently, the United States does not make on our shores any leading-edge chips, and this is the first time ever that we'll be able to say we will be making these leading-edge chips in the United States," said Commerce Secretary Gina Raimondo told reporters Thursday.

"I want to remind everyone that these are the chips that run AI and quantum computing. These are the chips that are in sophisticated military equipment," Raimondo added.

Making these chips in the United States, she noted, helps address a national security liability.

The first of TSMC's three facilities is set to fully open by early-2025, Biden noted.

At full capacity, the three facilities in Arizona are expected to "manufacture tens of millions of leading-edge logic chips that will power products like 5G/6G smartphones, autonomous vehicles, and high-performance computing and AI applications," the Commerce Department said.

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It added that "early production yields at the first TSMC plant in Arizona are on par with similar factories in Taiwan."

The investment is anticipated to create around 6,000 direct manufacturing jobs.

A senior US official told reporters on condition of anonymity that they expect at least $1 billion to go to TSMC this year.

Besides the $6.6 billion in direct funding, the United States is also providing up to $5 billion in proposed loans to TSMC Arizona.

While the United States used to make nearly 40 percent of the world's chips, the proportion is now closer to 10 percent -- and none are the most advanced chips.

TSMC shares were down by 0.6 percent in New York early Friday.

Source: AFP