The Biden administration has finalized substantial funding for Taiwan Semiconductor Manufacturing Company (TSMC) to propel the development of semiconductor manufacturing facilities on U.S. soil. With the aim to solidify the country's position within the global semiconductor domain, the U.S. Commerce Department has allocated up to $6.6 billion as direct subsidies along with proposed loans of $5 billion for the establishment of three fabrication plants located in Phoenix, Arizona.
This decision reflects the urgency with which the Biden administration is operating as it tries to cement its legacy before President-elect Donald Trump assumes office, where policy changes to the CHIPS Act may occur. This act is pivotal to advancing U.S. semiconductor production, which has dwindled significantly over the past decades. The percentage of semiconductors produced domestically has plunged from 37% thirty years ago to merely 10% today, highlighting the need for bolstered manufacturing capabilities.
The funding is deemed instrumental not only for economic enhancement but also for national security. Commerce Secretary Gina Raimondo emphasized this point, stating, “The leading-edge chips manufactured in Arizona will be foundational to the United States’ technological and economic leadership.” By the end of 2028, TSMC aims to produce its most advanced chips, which are often integral components of smartphones, artificial intelligence infrastructure, and military applications.
To effectuate the establishment of these plants, TSMC is committed to investing substantially—around $65 billion—creating approximately 6,000 direct manufacturing jobs along with over 20,000 temporary construction positions. These jobs are expected to be integral to rejuvenation efforts for local communities and economies. Raimondo referred to this collaboration with TSMC as a "significant step" toward securing the U.S. economy, stating it marks one of the most important investments aimed at advancing both U.S. economic stability and national security.
Despite skepticism and criticism surrounding the subsidy allocations, particularly from Trump and his supporters, the Biden administration moves forward with the deal as momentum is necessary before any potential shifts under the next administration. Trump himself has openly critiqued the CHIPS Act, claiming it’s not the best use of U.S. taxpayer money, and suggested tariffs as alternatives to subsidies. On the Joe Rogan Experience podcast, he remarked, “You didn’t have to put up 10 cents...” emphasizing his stance against financial contributions to foreign entities.
Interestingly, the timing of these funding distributions indicates the administration's strategy to safeguard agreements before Trump’s presidency. This proactive approach is also underlined by the fact multiple companies, including Intel, are racing to secure their own funding amid the political uncertainties looming from the transition to Trump. Intel is tapping the federal initiative to finalize $8.5 billion intended for their plant developments, reinforcing the necessity of these investments as vitally important for rejuvenation of U.S. manufacturing.
Community impact has also been carefully considered as part of the TSMC deal. The company has agreed to various workplace standards and environmental commitments, which signifies its alignment with socioeconomic responsibilities. For example, TSMC is putting measures to reduce carbon emissions entirely and investing millions toward workforce development and educational programs focused on STEM. This also includes providing financial support for childcare, which can greatly alleviate the challenges faced by working parents.
Meanwhile, Trump’s remarks bring to light the tension between progressivism and conservatism concerning manufacturing strategies. Economists have pointed out potential shifts concerning who benefits from the subsidies should Trump adopt policies counter to the current framework, which may alter the faces of those receiving aid—from predominantly working-class families to potentially upper-income families.
It is anticipated the first of TSMC's three plants will commence operations by early 2025. The real significance of enhancing chip production domestically by companies like TSMC cannot be overstated, as it promises to re-establish the United States as a major player within the global semiconductor market. Equally, it is imperative for the incoming administration to uphold commitment to agreements made to the workers and communities affected by these developments, ensuring continuity and stability as the semiconductor industry evolves.
Where the semiconductor sector will move from here remains to be seen, but for now, the finalization of these funding arrangements marks both an end and a beginning—a closing chapter for the Biden administration’s policies yet simultaneously opening new opportunities for the incoming Trump-led government which may have its own vision for such industries.