US Government Allocates $6.6 Billion to Boost TSMC Chip Production in Arizona
In a strategic move, President Joe Biden's administration is investing $6.6 billion in Taiwan's TSMC to establish three cutting-edge chip factories in Arizona. This initiative aims to strengthen the US chip supply chain and enhance domestic semiconductor production capabilities.
The US government is set to provide $6.6 billion to the largest semiconductor chip manufacturer in the world to support the construction of three factories in Arizona. This initiative is part of President Joe Biden's strategy to ensure a stable supply of advanced chips.
On Monday, the White House revealed that it had entered a non-binding agreement with Taiwan Semiconductor Manufacturing Company (TSMC) to offer financial assistance for the fabrication plants located in Phoenix. This includes the provision of around $5 billion in government loans.
"According to Biden, America initially created these chips. However, our production capacity has decreased from almost 40% worldwide to about 10%, and we are no longer leading in the development of the most advanced chips. This situation leaves us vulnerable to economic and national security risks."
Emergency personnel stand in front of a partially collapsed building leaning over a street in Hualien on April 3, 2024, after a major earthquake hit Taiwan's east.
Emergency personnel stand in front of a partially collapsed building leaning over a street in Hualien on April 3, 2024, after a major earthquake hit Taiwan's east.
Sam Yeh/AFP/Getty Images
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TSMC, the Taiwanese chip-maker, announced on Monday that they will be building a third plant in addition to the two previously announced US plants. This brings their total investment in Arizona to over $65 billion. TSMC manufactures around 90% of the world's most advanced chips.
Chairman Mark Liu of TSMC described this investment as "unprecedented" and highlighted that their US customers include leading technology companies. The three fabs, with the first one expected to start production in the first half of 2025, will provide these customers with a local supply of chips that are essential for various products like smartphones, satellites, and artificial intelligence systems.
The White House announced that the company's $65 billion investment in Arizona is the largest foreign direct investment in the state's history. They expect the three fabs to generate 6,000 high-wage tech jobs and over 20,000 indirect jobs, such as in construction.
This investment also plays a key role in securing supply chains.
The US government is stressing the importance of moving more chip production back to the country to prevent supply interruptions. The coronavirus pandemic showed how global chip deliveries were severely affected, leading to increased prices for consumer goods.
Taiwan is facing similar vulnerabilities. Experts in the supply chain and US officials are concerned that trade tensions between the US and China, as well as potential military actions from Beijing against the island, could disrupt its crucial chip manufacturing industry. A recent powerful earthquake in Taiwan further underscored the industry's susceptibility to natural disasters.
During a call with reporters before the announcement on Monday, US Commerce Secretary Gina Raimondo mentioned that President Biden was fed up with being at the bottom of the supply chain. She also highlighted that the new government funds will greatly enhance our domestic supply chain resilience.
Raimondo further stated that, for the first time ever, we will be producing the most advanced semiconductor chips right here in the United States of America, on a large scale.
Juliana Liu in Hong Kong contributed reporting.
Editor's P/S:
The US government's investment in TSMC's Arizona factories is a significant step toward securing the nation's supply of advanced semiconductor chips. The decline in domestic chip production has left the US vulnerable to supply chain disruptions and national security risks. By providing financial assistance to TSMC, the government is ensuring that the US will continue to play a leading role in the development and production of these essential components.
The investment is also a boost to the Arizona economy, creating thousands of high-wage tech jobs and supporting the growth of the state's technology sector. The presence of TSMC in Arizona will also attract other chip manufacturers and suppliers to the region, further strengthening the US semiconductor industry. Overall, this investment is a positive development for the US economy and national security.
