The U.S. Commerce Department announced on Friday the finalization of a $6.6 billion subsidy to Taiwan Semiconductor Manufacturing (TSMC) U.S. division for semiconductor production in Phoenix, Arizona. This binding contract marks a significant milestone in the $52.7 billion Chips and Science Act, enacted in 2022 to boost domestic semiconductor manufacturing.
TSMC has committed to an expanded investment of $65 billion in Arizona, including the construction of a third semiconductor fabrication plant (fab) by 2030. The second fab, expected to begin production in 2028, will manufacture the world’s most advanced 2-nanometer chips. Additionally, TSMC plans to use its cutting-edge “A16” chip manufacturing technology at the site.
“When we started this, there were a lot of naysayers … Actually, they are doing their most sophisticated chips in the United States,” Commerce Secretary Gina Raimondo said.
The agreement includes up to $5 billion in low-cost government loans, with cash disbursements tied to project milestones. At least $1 billion is expected to be released by the end of the year. In return, TSMC has agreed to share excess profits with the U.S. government under an “upside sharing agreement” and forgo stock buybacks for five years, with some exceptions.
TSMC CEO C.C. Wei said the deal “helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S.”
The subsidy is part of a broader effort to secure domestic production of advanced chips, currently unavailable in the U.S. The Commerce Department has also allocated $36 billion to other semiconductor projects, including $6.4 billion for Samsung in Texas, $8.5 billion for Intel, and $6.1 billion for Micron Technology, Reuters news report said.
Gina Raimondo emphasized the dual strategy of “offense and defense” against China, highlighting the need to both invest in domestic production and restrict the export of advanced semiconductor technology.