US grants $6.6 billion subsidy to TSMC for Arizona chip production

New grants to TSMC US: The US Commerce Department disclosed on Monday its decision to grant a $6.6 billion subsidy to Taiwan Semiconductor Manufacturing Co.'s (TSMC) American subsidiary for the advancement of semiconductor production in Phoenix, Arizona, along with up to $5 billion in low-cost government loans.

As part of the preliminary award, TSMC has committed to expand its planned investment by an additional $25 billion, reaching a total of $65 billion, and to establish a third fab in Arizona by 2030, the Commerce Department announced. The new facility, expected to commence production in 2028, will specialise in manufacturing the world's most advanced 2-nanometer technology.

Gina Raimondo, the Commerce Secretary, highlighted the critical role of these advanced chips in supporting artificial intelligence and essential technologies, including those vital for economic growth and national security.

TSMC, a key supplier to major tech companies like Apple and Nvidia, had initially announced a $40 billion investment in Arizona. The company anticipates commencing high-volume production at its first U.S. fab by the first half of 2025.

This investment from TSMC represents the largest foreign direct investment in a new project in U.S. history, according to the Commerce Department, which noted that Congress had approved significant funding to bolster domestic semiconductor manufacturing.

TSMC Arizona has also committed to supporting the development of advanced packaging capabilities through partnerships within the U.S., enabling customers to procure advanced chips manufactured entirely on American soil.

The projects are expected to generate 6,000 direct manufacturing jobs and 20,000 construction jobs, with several TSMC suppliers planning to construct or expand plants in the U.S. Additionally, the Arizona fabs will manufacture leading-edge chips for various applications, including 5G/6G smartphones, autonomous vehicles, and AI data centre servers.

Through these initiatives, TSMC aims to address the capacity demands of key customers and enhance their competitiveness in the digital transformation era.

Previously, the Commerce Department had announced substantial grants and loans for Intel to support leading-edge chip production, and it is anticipated to unveil a similar award for Samsung Electronics in the coming week.

(With Reuters inputs)