TSMC to make world’s most advanced semiconductors in US, gets $6.6 billion subsidy

The US Commerce Department has signed an accord with Taiwan Semiconductor Manufacturing Company (TSMC) to build the world's most advanced semiconductors at Arizona in Phoenix by the end of 2030.  It has also awarded $6.6 billion as subsidy and $5 billion in low-cost government loans to TSMC for the advance production unit, aimed to boost the supply chain of semiconductors in the US, Reuters reported.

The US Commerce Department said the TSMC— the world's largest contract chipmaker—has agreed to expand its planned investment by $25 billion to $65 billion, and to add a third Arizona fabrication by 2030. The Taiwanese company will produce the world's most advanced 2-nanometer technology at its second Arizona fab expected to begin production in 2028, the department added.

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"These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin our economy, but frankly, a 21st century military and national security apparatus," Reuters quoted Commerce Secretary Gina Raimondo as saying.

TSMC Arizona, a major supplier to Apple and Nvidia, has also committed to support the development of advanced packaging capabilities through partners in the US, the department said, adding 70% of TSMC customers are US companies.

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The company would help US tech firms "unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona," TSMC CEO C.C. Wei said.

At full capacity, the three fabrication units of TSMC in Arizona will manufacture tens of millions of leading-edge chips in 5G/6G smartphones, autonomous vehicles, and AI data centre servers, the commerce department said.

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Through the fabrication unit in Arizona, the chipmaker will support key customers like Apple, Nvidia, Advanced Micro Devices (AMD) and Qualcomm "by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era," the US Commerce Department added.

The $65 billion-plus investment by TSMC is the largest foreign direct investment in a completely new project in US history, the Commerce Department said.

In 2022, the US had barred domestic companies from shipping equipment to Chinese factories producing advanced chips, in a bid to  curb Beijing's technological advances, citing security concerns.

(With inputs from Agencies)