The United States has finalized a deal to provide Taiwanese semiconductor giant TSMC with up to $6.6 billion in direct funding to establish cutting-edge manufacturing facilities on American soil. In addition to this significant funding, up to $5 billion in proposed loans has been allocated to support TSMC Arizona, officials confirmed on Friday.
The agreement, announced just ahead of a potential political transition, highlights the Biden administration’s commitment to bolstering domestic semiconductor production. President Joe Biden emphasized the transformative impact of the partnership, stating, “This historic agreement with TSMC, the global leader in advanced semiconductor manufacturing, will drive $65 billion in private investment to construct three state-of-the-art facilities in Arizona.”
The CHIPS Act, a landmark initiative under the Biden administration designed to rejuvenate the U.S. semiconductor industry, has facilitated over $36 billion in grants, including TSMC’s allocation. However, much of these funds remain in a due diligence phase, with disbursements contingent on milestone achievements.
Commerce Secretary Gina Raimondo highlighted the significance of the deal, noting the strategic importance of producing leading-edge chips domestically. “For the first time, we’ll manufacture advanced chips that power AI, quantum computing, and military systems here in the United States,” Raimondo stated, emphasizing the national security advantages.
The three TSMC facilities in Arizona are set to begin operations by early 2025. Once fully functional, these plants are projected to produce millions of high-performance chips annually, serving applications such as 5G/6G smartphones, autonomous vehicles, and AI-driven technologies. The venture is expected to generate 6,000 direct manufacturing jobs and reduce the U.S. reliance on foreign chipmakers.
Currently, TSMC produces most of its advanced chips in Taiwan. Early production at the Arizona facilities, however, has already achieved yields comparable to TSMC’s Taiwan operations, a promising indicator of success.
A senior U.S. official, speaking anonymously, revealed that at least $1 billion is expected to be disbursed to TSMC this year as part of the agreement. This partnership marks a pivotal step in revitalizing the U.S. semiconductor industry, which once accounted for 40% of global chip production but has since dwindled to around 10%, with no presence in manufacturing the most advanced chips.
By bringing leading-edge chip manufacturing back to the United States, this collaboration between the U.S. government and TSMC aims to strengthen economic and technological resilience for years to come.