US Chip Manufacturing Boosted by $6.6B Funding Deal

Taiwan Semiconductor Manufacturing Company (TSMC) is expanding its chip manufacturing plans in the U.S. after securing $6.6 billion in funding as part of a Department of Commerce agreement. 

The funds will be used to build a third facility in Phoenix, Arizona as the company nears completion of its first site in the city and construction continues on another. 

The company will receive subsidies from the CHIPS and Science Act which encourages chip manufacturers to bring their production efforts to the U.S.

TSMC will also benefit from tax credits of up to 25% on investments exceeding $100 billion over the next five years.

“TSMC’s renewed commitment to the U.S., and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day,”  said President Joe Biden.

With the announcement, the Commerce Department said the U.S. is on track to produce 20% of the world’s chips by 2030.

The new site will produce two-nanometer chips, which pack more transistors onto a single piece of hardware and are designed to offer improved performance at a reduced size.

Production at TSMC’s newest Arizona site will begin by the end of the decade.

Related:Biden to Award Intel $20B to Advance U.S. Chip Manufacturing

The first site will begin manufacturing four nanometer processes in the first half of 2025 while the second will open in 2028.

“We are thrilled by the progress of our Arizona site to date and are committed to its long-term success,” said C.C. Wei, TSMC CEO.

Each of TSMC’s Arizona sites will have a cleanroom, an environment where manufacturing is heavily controlled to avoid impurities, double the size of an industry-standard logic factory.

The Phoenix sites will also recycle 90% of water used. TSMC has already begun designing plans for an industrial water reclamation plant. Chipmaking sites like TSMC’s plants use vast quantities of water each day to ensure wafer sheets are free of dust and debris.

“The CHIPS and Science Act provides TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the U.S.,” said Mark Liu, TSMC chair. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

TSMC becomes the latest chip manufacturer to receive funding under the CHIPS Act. Intel secured $20 billion in funding in March to build and expand facilities in Arizona, Ohio, New Mexico and Oregon.

Related:Nvidia to Build $200M AI Center in Indonesia, Boost Presence in Region

TSMC manufactures more than 90% of the world’s logic chips including CPUs and GPUs across sites in Taiwan, Japan and China. Last August, the company announced plans to build a chipmaking plant in Dresden, Germany.

The CHIPS and Science Act was introduced in August 2022 to increase the country’s lost semiconductor production leadership while addressing shortages in the chip supply chain.