TSMC secures a $6.6 billion subsidy from the United States for its chip production facility in Arizona

The U.S. Commerce Department has revealed its decision to grant Taiwan Semiconductor Manufacturing Co.’s (TSMC) U.S. division a substantial subsidy of $6.6 billion to support advanced 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 expanding its planned investment by an additional $25 billion, bringing the total investment to $65 billion. Additionally, TSMC will establish a third fab in Arizona by 2030. The new fab will focus on producing cutting-edge 2 nanometer technology, which is essential for various applications, including artificial intelligence.

Commerce Secretary Gina Raimondo emphasized the importance of these chips, stating that they are crucial for driving economic growth and ensuring national security. TSMC, a key supplier to tech giants like Apple and Nvidia, had previously announced a $40 billion investment in Arizona. The first U.S. fab is expected to commence high-volume production by the first half of 2025.

This investment by TSMC represents the largest foreign direct investment in a new project in U.S. history. It aligns with the Chips and Science Act passed by Congress in 2022, which aimed to bolster domestic semiconductor production through significant subsidies and government loan authority.

TSMC Arizona has also pledged to support the development of advanced packaging capabilities through partnerships with U.S. companies, enabling customers to procure advanced chips manufactured entirely in the U.S. This move is significant, as 70% of TSMC’s customers are U.S.-based companies.

CEO C.C. Wei expressed TSMC’s commitment to empowering U.S. tech firms and enhancing capacity for leading-edge technology through its Arizona facilities. The project is expected to generate 6,000 direct manufacturing jobs and 20,000 construction jobs, with numerous TSMC suppliers planning to build or expand plants in the U.S.

Once operational, TSMC’s fabs in Arizona will produce millions of advanced chips for applications such as 5G/6G smartphones, autonomous vehicles, and AI data center servers. This will support key customers like Apple, Nvidia, Advanced Micro Devices (AMD), and Qualcomm, helping them address capacity demands and supply chain concerns.

TSMC has also prioritized environmental sustainability, aiming for a 90% water recycling rate at its Arizona factories and planning to build a water reclamation plant to achieve “near zero liquid discharge.”

In addition to TSMC, the Commerce Department recently announced grants and loans for Intel to support leading-edge chip production. Sources suggest that an award for Samsung Electronics from the same program may be announced soon.