TSMC Lands Up to $11.6 Billion to Expand Arizona Chip Hub

The Taiwanese chipmaker already had two factories in the works, and it’s getting some funds to build a third.

Photo of TSMC logo
Photo by Tyrone Siu via CC BY-SA 2.0

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Taiwan Semiconductor Manufacturing Company — the largest chipmaker in the world — was already building a pair of new fabrication plants in Arizona when the Biden administration on Monday made an offer it couldn’t refuse: up to $11.6 billion in federal grants and loans to help TSMC upgrade its manufacturing plans and add a third factory to its Grand Canyon State footprint. 

Bringing it Back

The US is still a top chipmaker, accounting for about 12% of the global industry, but its share was more than three times that in 1990. Much of the capacity now exists in East Asian countries, including China, Japan, South Korea, and, of course, Taiwan. And because semiconductors are a part of pretty much every electronic device, it was a George Foreman-esque gut punch when the pandemic disrupted those supply chains.

The CHIPS and Science Act passed in 2022 earmarked $39 billion in direct grants — plus loans and guarantees worth $75 billion — toward US chip manufacturing. The White House has just started divvying up the money to eager tech firms, which have collectively announced $200 billion in US investment since Biden took office, Bloomberg reported. And now TSMC, maker of the most advanced chips, is about to get itself a major slice of the pie:

  • TSMC was awarded $6.6 billion in grants, and it can potentially receive as much as $5 billion in loans. The company has two fabs in Arizona that are expected to start production in 2025 and 2028, and it plans to add a third factory by the end of the decade.
  • In March, Intel was awarded $8.5 billion in grants, and in February, GlobalFounderies was awarded $1.5 billion. Sources also told Reuters on Monday the White House could announce between $6 billion and $7 billion in grants for South Korean chipmaker Samsung to expand its output in Texas.

It’s Politics: You’d think there was an election going on or something. TSMC had already started planning factories in Arizona, a state that Biden won in 2020 by only about 10,000 votes. Biden clearly hopes to keep the state blue in 2024 with the promise of new jobs and capital.