The United States has finalized a major funding agreement with Taiwanese semiconductor giant TSMC, awarding up to $6.6 billion to establish cutting-edge manufacturing facilities on American soil. The announcement, made by the Biden administration on Friday, aims to bolster the domestic production of advanced semiconductors, crucial for industries ranging from artificial intelligence to military defense systems.
TSMC's Strategic Move to the US
The funding agreement will support the construction of three state-of-the-art chip manufacturing plants in Arizona, which are expected to become operational by early 2025. These facilities represent a significant milestone for the US semiconductor industry, which has faced criticism for its reliance on foreign manufacturing. At full capacity, the Arizona plants will produce tens of millions of advanced logic chips annually, powering technologies like 5G/6G smartphones, autonomous vehicles, and high-performance computing applications.
The Biden administration emphasized the importance of this investment. “Today’s final agreement with TSMC, the world’s leading manufacturer of advanced semiconductors, will spur $65 billion in private investment,” said President Joe Biden in a statement. The deal is expected to create around 6,000 direct manufacturing jobs, in addition to thousands of indirect roles.
Boosting National Security
Commerce Secretary Gina Raimondo highlighted the strategic importance of domestic semiconductor production, noting its implications for national security. “Currently, the United States does not produce leading-edge chips domestically. These are the chips that power AI, quantum computing, and sophisticated military equipment. Manufacturing them in the US addresses a critical security liability,” Raimondo said.
The new facilities will bring the United States closer to achieving self-reliance in semiconductor production, reducing dependence on Taiwan and other foreign producers. The Commerce Department also noted that early production yields at the first TSMC plant in Arizona are comparable to those of TSMC’s factories in Taiwan, indicating that the facilities will match global standards.
CHIPS Act and the Trump Administration’s Criticism
The funding for TSMC is part of the broader CHIPS Act, a landmark initiative passed during Biden's presidency to revitalize the US semiconductor industry. The Act has allocated over $36 billion in grants to various companies, although much of the funding remains in the due diligence phase.
President-elect Donald Trump, who has criticized the CHIPS Act, has questioned its long-term effectiveness, citing concerns over its implementation and oversight. Despite these criticisms, industry experts view the TSMC deal as a transformative step toward reducing America’s reliance on foreign-made chips.
A Historic Turning Point
The United States was once a global leader in semiconductor manufacturing, producing nearly 40% of the world’s chips. However, that figure has declined to around 10%, with no domestic production of the most advanced chips. The TSMC agreement marks a significant reversal of this trend, signaling a renewed commitment to regaining technological leadership.
Besides the direct funding, the US government is also offering up to $5 billion in proposed loans to support TSMC’s Arizona operations. A senior US official indicated that at least $1 billion from the CHIPS Act funding will be allocated to TSMC in 2024 alone.
