WASHINGTON, Nov 15 (Reuters) – The U.S. Commerce Department announced the completion of a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Co. (TSMC) to boost semiconductor production in Phoenix, Arizona. This agreement marks a milestone under the $52.7 billion CHIPS and Science Act, established in 2022 to enhance domestic chip manufacturing capabilities.
The finalized contract builds on a preliminary agreement from April, making it the first major allocation under the program. TSMC committed to an ambitious expansion, increasing its planned investment to $65 billion by 2030 and adding a third Arizona facility. The company will introduce the cutting-edge 2-nanometer technology at its second fab, expected to commence production in 2028. Additionally, TSMC plans to deploy its advanced “A16” chip manufacturing technology at the Arizona facilities.
“The Most Sophisticated Chips in the U.S.”
Commerce Secretary Gina Raimondo highlighted the significance of TSMC’s investment:
“When we started this, skeptics doubted TSMC would bring advanced technology to the U.S. But they are delivering their most sophisticated chips here.”
The subsidy includes $5 billion in low-cost loans, with cash disbursements tied to project milestones. Commerce aims to release at least $1 billion to TSMC by year-end. As part of the agreement, TSMC agreed to forgo stock buybacks for five years (with exceptions) and share excess profits with the U.S. government through an “upside sharing agreement.”
Strengthening Domestic Semiconductor Capabilities
TSMC CEO C.C. Wei emphasized the importance of the deal:
“This agreement accelerates the development of the most advanced semiconductor manufacturing technology available in the U.S.”
The CHIPS and Science Act has spurred similar investments across the industry, with Commerce allocating funds to other key players, including Samsung ($6.4 billion for Texas projects), Intel ($8.5 billion), and Micron Technology ($6.1 billion). Raimondo reiterated the importance of aligning private investments with national security goals, highlighting the necessity of securing advanced chip production domestically.
Balancing Innovation and Security
Raimondo also addressed recent actions to curb the export of advanced chips to China. While she did not confirm reports that Commerce directed TSMC to halt shipments to Chinese customers, she stressed the dual approach of fostering innovation domestically and restricting sensitive technology exports to safeguard national security.
“Investing in TSMC here is offense; ensuring export controls with China is defense,” she explained.
This pivotal agreement with TSMC underscores the U.S. government’s commitment to reshoring semiconductor manufacturing, addressing both economic competitiveness and national security concerns.
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