The Biden administration will provide up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the leading maker of the most advanced microchips, to bring some of the most advanced semiconductor technologies to the United States.
Funding from the bipartisan CHIPS and Science Act will help support the construction of TSMC’s first major U.S. hub in Phoenix. The company has already committed to building two plants at the site and will use some of the grant money to build a third factory in Phoenix, U.S. officials said Sunday. TSMC will also increase its total investment in the United States from $40 billion to over $65 billion.
Federal officials view the investment as crucial to building a reliable domestic supply of semiconductors, the small chips that power everything from phones and supercomputers to cars and fighter jets. Although semiconductors were invented in the United States, much of their production has shifted overseas in recent decades. Only about 10 percent of the world’s chips are made in the United States.
The award is the federal government’s second-highest honor in a program aimed at re-establishing the United States as a leader in semiconductor manufacturing. The revelation comes weeks after President Biden announced that Intel, another major chipmaker, would receive $8.5 billion in grants and loans as part of a tour of battleground states to sell its economic agenda would receive up to $11 billion.
The CHIPS Act, which lawmakers passed in 2022, gave the Commerce Department $39 billion to distribute as subsidies to encourage companies to build and expand chip factories in the United States. The program is a key pillar of President Biden’s economic policy agenda focused on strengthening America’s manufacturing sector.
TSMC’s award brings the total announced grants to more than $16 billion. Three other smaller companies, including GlobalFoundries, Microchip Technology and BAE Systems, received the first awards.
In addition to the grants, the federal government will provide TSMC with up to $5 billion in loans. The company is also expected to take advantage of federal tax credits that could cover 25 percent of the cost of building and equipping factories with production equipment. About $50 million of the grants will be allocated to training and developing the company’s workforce, federal officials said.
Gina Raimondo, the Commerce Secretary, said the investment would help the United States begin producing the most advanced semiconductors used in artificial intelligence, smartphones and the most sensitive military hardware.
“It is a national security issue that we do not make one of the most advanced chips in the world in the United States,” Ms. Raimondo said on Sunday. “As a result of this announcement, these chips will now be manufactured in the United States.”
Earlier this year, Ms. Raimondo said new investments in semiconductor companies would put the United States on track to produce about 20 percent of the world’s most advanced logic chips by the end of the decade.
TSMC’s investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs, federal officials said. TSMC must reach certain construction and production milestones before payments can be made.
The company has relied on federal aid for years. According to company officials, discussions about a partially subsidized expansion in the U.S. began in 2019, during the Trump administration. TSMC first announced construction of a new facility in Phoenix in May 2020, a project that company officials said would ultimately require government subsidies to cover the higher costs of building and operating chip factories in the United States.
In December 2022, several months after the passage of the CHIPS Act, TSMC announced construction of a second factory at the site, increasing the total investment from $12 billion to $40 billion.
But since TSMC began construction in 2021, the company has encountered various stumbling blocks that have delayed the start of production. Last summer, TSMC pushed back initial production at its first factory from this year to 2025, saying local workers lacked expertise in installing some sophisticated equipment. In January, the company said the second plant would not meet its original schedule of starting production in 2026.
According to Biden administration officials, production at the second plant is expected to begin in 2028, and production at the third plant is expected to begin by the end of the decade.
TSMC’s expansion in the United States could have an outsized impact on the global semiconductor supply chain, whose vulnerabilities have been exposed by the crippling chip shortage during the pandemic.
TSMC, which pioneered the idea of making chips to order for others to design them, operates huge factories in Taiwan that produce most of the small components that power computers, phones, networking equipment, home appliances and military equipment. America’s dependence on the company’s factories on an island that China does not recognize as independent and claims to be part of its territory has long worried U.S. officials.
New generations of production technology are often described in nanometers or billionths of a meter, a measure of key dimensions of microscopic circuits. In December 2022, TSMC announced that it would produce 3-nanometer chips at its second factory in Arizona. Biden administration officials announced that the next generation of technology with 2 nanometers will now be introduced at the second plant.
Such advances determine how many transistors can be packed onto each small slice of silicon, allowing chips to perform calculations faster and store more data. Over the last decade, TSMC replaced Intel in providing the most advanced manufacturing technology, producing components that Apple designs for its latest smartphones and Nvidia develops to power artificial intelligence applications such as ChatGPT.
Although the planned addition of 2-nanometer technology represents a significant advance, it does not necessarily mean that TSMC’s US factories will offer the latest technology at the same time as its factories in Taiwan. The company is researching new technologies on the island. Adapting these processes to mass production typically occurs first in nearby buildings to speed the transition and reduce engineers’ travel time.
It remains possible that Intel, struggling to regain its lead in manufacturing technology, will offer the industry’s most advanced production technology in U.S. factories by 2028. The company conducts its manufacturing technology research in Oregon.
Biden administration officials are expected to award additional grants in the coming months to other major chipmakers that have invested in new or expanded domestic facilities in recent years, including Micron Technology and Samsung.
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2024-04-08 09:04:30
www.nytimes.com
