The Biden administration announced on Monday that up to $6.6 billion in federal funding will be given to the state as Taiwan Semiconductor Manufacturing Co. (TSM) commits to a $25 billion expansion to build a third TSMC manufacturing plant in Arizona. They announced that they plan to send subsidies.
The deal is the second major U.S. semiconductor manufacturing subsidy announcement in the past three weeks and is part of President Joe Biden's efforts to restart advanced semiconductor manufacturing in the United States.
Biden announced in March that the U.S. would provide up to $8.5 billion in grants to Intel (INTC) over the next few years to support various new projects in Arizona, Ohio, New Mexico and Oregon. Announced.
The companies' funding comes from the CHIPs and Science Act of 2022, the signature accomplishments of Biden's current term.
TSMC plans to use the grant to fund continued construction of two manufacturing plants already built in the Phoenix area. The company announced Monday that it will build a third facility there in the next few years.
The goal is for all three factories to be operational and producing TSMC's most advanced chips by the end of 2010. Some factories even want to use the upcoming 2-nanometer manufacturing process to make even more advanced chips than are currently available.
Commerce Secretary Gina Raimondo told reporters ahead of the announcement: “These are the chips that power all of our artificial intelligence, these are the chips that are a necessary component of the technology that we need to support our economy.”
The $6.6 billion in grants over the next few years includes an allocation of $50 million for workforce development and authorization for up to $5 billion in additional government loans. This influx comes on top of the 2022 law's manufacturing tax credits, which could be worth billions more.
The government funding will be combined with TSMC's plan to invest more than $65 billion in its Arizona operations. The company previously announced $40 billion, and today announced an additional $25 billion primarily to fund construction of its third manufacturing facility.
Monday's news highlights Arizona's central role in efforts to bring semiconductor manufacturing back to the United States.
President Biden has made several semiconductor-themed visits to the state in recent years, including a stop last month to announce subsidies for Intel, which is also building in the state. included.
“This is an exciting day for Arizona. We are leading the way in bringing cutting-edge microchip manufacturing back to the United States,” said Arizona Sen. Mark Kelly, a negotiator on the 2022 legislation. '' he told Yahoo Finance.
Monday's announcement marks the fifth manufacturing award under the act.
In addition to TSMC and Intel, three smaller manufacturing awards were previously announced. BAE Systems (BAESY) has about $35 million, Microchip Technology has $162 million and GlobalFoundries (GFS) has $1.5 billion, primarily to fund the production of less advanced but still important chips. was offering.
Enacted 20 months ago, the White House will spend about $50 billion over the next few years to revitalize manufacturing, including $39 billion specifically for manufacturing. It is recognized that
Focus on the labor market
Arizona's path to semiconductor-centricity dates back to May 2020, when TSMC announced new plans for the state.
This effort is also a struggle to ensure that enough Americans are trained for the next position. TSMC recently announced that it would postpone full-scale operation of its first U.S. factory from 2024 to 2025, citing a labor shortage as the reason and bringing in Taiwanese workers to cope.
“We expect immigration and expertise from Taiwan to continue to be very important, both in terms of equipment and construction,” a senior Biden administration official said ahead of the announcement. The official added that the government and TSMC's workforce development efforts “will have the overwhelming effect of this investment creating jobs for thousands of Americans.”
TSMC also said it expects each subsequent project to alleviate some of the worker shortage, with Chairman Dr. Mark Liu recently saying the first two projects are “the first in Arizona. “Even if we face challenges in building the fab…we believe.” The construction of our second factory will continue to be even smoother. ”
Biden officials called the entire TSMC project the largest foreign direct investment in an entirely new project in U.S. history, and is expected to create at least 6,000 direct permanent jobs in addition to 20,000 temporary construction jobs. .
Other companies are also working to supply new large-scale facilities, with the project expected to lead to “tens of thousands” of additional jobs.
Lael Brainard, director of the Biden administration's National Economic Council, said the increase in investment is due to continued growth in demand for chips from U.S. companies and for chips made in the United States.
She noted that government officials such as Apple (AAPL) CEO Tim Cook and Nvidia (NVDA) CEO Jensen Huang attended the 2022 groundbreaking ceremony for TSMC's second facility in Arizona. . Apple and NVIDIA currently rely almost exclusively on the company's chips, which are manufactured in Taiwan.
In a statement Monday, Chairman Liu said the government funding made the investment expansion possible. “Our U.S. operations will enable us to better support our U.S. customers, including some of the world's largest technology companies.” he added.
Monday's announcement is part of the Biden administration's ambitious overall goal to have the United States produce 20% of the world's most advanced semiconductor chips by the end of this decade.
Secretary Raimondo oversees the team implementing this law and has often cited the difficult challenge that the United States currently produces 0% of these advanced chips (and only 10% of all chips). I am.
This post has been updated with additional context.
Ben Werschkul is Yahoo Finance's Washington correspondent.
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