On April 9, it was announced that the United States will provide a total of $11.6 billion in subsidies and loans to TSMC to support the construction of its third semiconductor plant in Arizona.
According to a preliminary agreement disclosed on Monday, the US plans to provide $6.6 billion in grants and up to $5 billion in loan support to TSMC. The company intends to establish its third semiconductor plant in Phoenix, Arizona, with its first two facilities in the state expected to commence production in 2025 and 2028, respectively.
As a major chip manufacturer for companies like Apple and Nvidia, this move by TSMC in the US will bring its total investment across the three plants to over $65 billion.
The third plant will utilize cutting-edge 2-nanometer process technology and is planned to commence operations before 2030. Gina Raimondo, the US Secretary of Commerce, emphasized the significance of 2-nanometer chips for emerging technologies including artificial intelligence.
"This will mark the first time the world's most advanced semiconductor chips are mass-produced by American workers on US soil," Raimondo stated. TSMC plans to start producing 2-nanometer chips in Taiwan by 2025.
TSMC will need several months to complete due diligence before signing a binding final agreement and receiving committed subsidies. The US will disburse funds based on construction and production milestones, with the possibility of repayment if TSMC fails to meet the agreement terms.
The subsidies and loans granted to TSMC signify another significant achievement for the US Biden administration's advancement of domestic semiconductor industry development through the 2022 Chips Act. The program allocates $39 billion in grants and offers $75 billion in loans and guarantees to attract chip companies to establish factories in the US, with the TSMC agreement being one of its largest-scale projects announced.
TSMC's American depositary receipts rose 2.8% in early trading on the New York Stock Exchange on Monday, reaching $145.35. However, they closed with only a 1.01% increase.
Intel has signed a preliminary agreement for nearly $20 billion in subsidies and loans, while Samsung Electronics of South Korea is expected to receive over $6 billion in subsidies. The US Department of Commerce has also disbursed three batches of subsidies to companies manufacturing traditional chips, with announcements expected in the coming weeks regarding subsidies and loans to Micron worth several billion dollars.
Since President Biden took office, over $200 billion in investments have been announced to be allocated in the US, mainly concentrated in Arizona, Texas, and New York. The agreement announced on Monday follows months of negotiations between the US Department of Commerce and TSMC.
Currently, TSMC is the world's largest semiconductor foundry. Chairman Mark Liu stated, "The funding provided by the Chips Act will bring unprecedented investment opportunities to TSMC and enable us to provide advanced manufacturing technology services in the US."
President Biden stated in a White House release, "America's semiconductor manufacturing and employment opportunities are rebounding. Today, we will build on this historic progress."
Arizona has greatly benefited under the Chips Act, with not only Intel conducting large-scale expansions but also introducing multiple supply chain-related projects. Raimondo noted that $50 million of the subsidies granted to TSMC will be specifically allocated for training local workers, with the entire project expected to create 6,000 high-tech manufacturing jobs and over 20,000 construction jobs.
A senior government official mentioned that the project is also expected to benefit from investment tax credit programs.
TSMC's factory plans in Arizona have faced setbacks, including delays in the construction of the first plant due to conflicts with unions lasting several months. The second plant is currently planned to produce 2-nanometer and 3-nanometer chips. Production plans have been postponed to 2028 due to market conditions and uncertainties in US government support. Additionally, at least one supplier planning to collaborate in Arizona canceled its project due to labor shortages.
TSMC is also advancing other international projects in Japan and Germany. This year, the company held an opening ceremony for its wafer plant in Kumamoto, Japan, with support provided by the local government.
