On Nov. 15, the Biden-Harris Administration announced that the U.S. Department of Commerce awarded TSMC Arizona up to $6.6 billion in direct funding under the CHIPS Incentives Program’s Funding Opportunity for Commercial Fabrication Facilities. The award comes after the previously signed preliminary memorandum of terms, announced on April 8, 2024, and the completion of the Department’s due diligence. The award will support the company’s planned investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix. The Department will disburse the funds based on TSMC Arizona’s completion of project milestones.
“Two years ago, shortly after I signed the CHIPS & Science Act, I visited Arizona to announce a commitment by TSMC to invest in America, create American jobs, and shore up American supply chains,” said President Joe Biden in a press release. “On that day, I spoke about how the United States invented semiconductors and used to manufacture nearly 40% of the world’s chips, but now makes closer to 10% of them and none of the most advanced chips. I came to office determined to change that, and we have since delivered on that promise, catalyzing nearly $450 billion in private investment in semiconductors, creating over 125,000 new construction and manufacturing jobs, and reshoring critical technologies to bolster our national and economic security. 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 and create tens of thousands of jobs by the end of the decade. This is the largest foreign direct investment in a greenfield project in the history of the United States. The first of TSMC’s three facilities is on track to fully open early next year, which means that for the first time in decades an America manufacturing plant will be producing the leading-edge chips used in our most advanced technologies — from our smartphones, to autonomous vehicles, to the data centers powering artificial intelligence. Today’s announcement is among the most critical milestones yet in the implementation of the bipartisan CHIPS & Science Act, and demonstrates how we are ensuring that the progress made to date will continue to unfold in the coming years, benefitting communities all across the country.”
READ MORE: Biden speech highlights TSMC impact on Arizona businesses
U.S. Secretary of Commerce Gina Raimondo explains during a press call that TSMC will manufacture some of the most sought after semiconductors on the planet, including two and three nanometer chips, along with A16 technology — the most advanced semiconductor technology in the world. The advanced chips that TSMC manufactures for its customers are the backbone of CPUs for servers in large-scale data centers and of specialized GPUs used for machine learning. The Biden-Harris Administration’s investment is expected to create approximately 6,000 direct manufacturing jobs and more than 20,000 total unique construction jobs.
“The investment that we’re making is going to allow us to out compete and out innovate the rest of the world,” Raimondo continues. “It’s impossible to overestimate how significant this announcement is for America’s national security and economic security. As I said so many times, currently, the United States does not make any leading edge chips on our shores, 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. 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. When we were lobbying and talking to Congress for this bill, we constantly said, what a national security liability it was that we bought all these chips from Taiwan, and today we were able to say these will now be made in the United States of America.”
Through this investment in TSMC Arizona, the CHIPS Program Office is taking a significant step to strengthen U.S. economic and national security by helping to provide a reliable domestic supply of the chips that will underpin the 21st century technology economy, powering artificial intelligence and other fast-growing industries such as high-performance computing, consumer electronics, automotive, and Internet of Things. At full capacity, TSMC Arizona’s three fabs are expected to manufacture tens of millions of leading-edge logic chips that will power products such as autonomous vehicles and high-performance computing.
“We are thrilled that the Biden Administration’s Department of Commerce has awarded TSMC with this critical funding that will spur the company’s historic 65-billion-dollar investment in our community—an investment that is already changing lives for thousands of residents,” Phoenix Mayor Kate Gallego said. “From creating incredible, great-paying union jobs to bolstering the nation’s vital supply chain of this sought-after, advanced technology, there is no question that the CHIPS Act will have generational impacts on our city, region, and nation. Phoenix is proud to lead on the front lines of the American manufacturing revolution and stands ready to continue the strong momentum and partnership the City has with TSMC and its suppliers.”
Gallego is a long-time advocate for building a knowledge-based economy in Phoenix. In an effort to deliver high-wage, resilient jobs, Gallego played a leading role in securing the investment from TSMC when she traveled to Taiwan during her first year as mayor in 2019. TSMC was considering other states before the company narrowed in on Arizona, but sealed the deal thanks to Gallego, who worked in economic development for Salt River Project (SRP) prior to serving in elected office.
“For too many years, our government gave up on the semiconductor industry and ceded the lead to Asia,” explains Lael Brainard, White House National Economic Advisor and co-chair of the CHIPS Implementation Steering Council during a press call. “We can never make that mistake again. Today’s award will restore America’s position in leading edge semiconductor manufacturing at a time when it’s vital for our preeminence in advanced AI and other industries. With today’s $6.6 billion chips award, TSMC will invest $65 billion — the largest foreign direct investment in a greenfield project in U.S. history. And when TSMC’s facility opens early next year, it will mean that for the first time in American history, the chips that power some of our most advanced technologies, from our data centers to 5G and 6G smartphones, will be made in America. Some skeptics said America could not regain its competitiveness in leading edge semiconductor manufacturing. They were wrong.”
Up until now, TSMC has been manufacturing over 90% of the world’s leading edge chips in Taiwan. Brainard says that TSMC is formally committed to bringing its leading technology and manufacturing processes to the U.S., diversifying global supply chains. Not only has TSMC committed to build three leading edge semiconductor fabs in Phoenix, but just last month TSMC reported that early production yields at its semiconductor plant in Arizona have already met its Taiwan fabs, marking a major milestone.
READ MORE: TSMC plans third fab in Phoenix, increases investment to $65 billion
“Entering this phase of the U.S. CHIPS and Science Act marks a pivotal step in strengthening the semiconductor ecosystem in the United States,” says TSMC Chairman and CEO Dr. C.C. Wei in a press release. “TSMC appreciates the continual collaboration with customers, partners, local communities and the U.S. government beginning in early 2020. The signing of this agreement helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S.”
In addition to the direct funding of up to $6.6 billion, the CHIPS Program Office will provide up to $5 billion of proposed loans — which is part of the $75 billion in loan authority provided by the CHIPS and Science Act — to TSMC Arizona under the award. As stated in the CHIPS Notice of Funding Opportunity for Commercial Fabrication Facilities, CHIPS for America will distribute direct funding to recipients for capital expenditures based on the completion of construction, production, and commercial milestones, and disburse loans to TSMC Arizona for amounts invested in capital expenditures. The program will track the performance of each CHIPS Incentives Award via financial and programmatic reports, in accordance with the award terms and conditions.
“None of this would have happened without President Biden and his extraordinary leadership, and none of it would have happened without the bipartisan support on Capitol Hill for the CHIPS and Science Act. So to all of the members of Congress in both parties that worked hard to make this happen, I want to say thank you,” Raimondo says. “I’ve been proud to do this work, and I cannot wait to see TSMC continue over the years to invest in America, to expand in America, and I have no doubt that they will be successful.”
