PHOENIX — The Biden-Harris Administration, alongside the U.S. Department of Commerce, recently announced the finalization of up to $6.6 billion in direct funding for Taiwan Semiconductor Manufacturing Company (TSMC) through the CHIPS Act. This substantial investment is aimed at bolstering semiconductor production and reshoring advanced technology manufacturing to American soil, primarily focusing on TSMC's operations within Arizona.
TSMC is poised to utilize these funds to support its ambitious plan of investing over $65 billion to establish three state-of-the-art semiconductor fabrication plants, or fabs, based in Phoenix. The funding will be disbursed progressively as TSMC meets specified project milestones, reinforcing the government's commitment to revitalizing the manufacturing sector amid increasing demand for semiconductor technology.
President Joe Biden praised this move, reiterizing the administration's efforts to revitalize the semiconductor industry. During his statement, Biden noted, "Two years ago, shortly after I signed the CHIPS & Science Act, I visited Arizona to announce TSMC's commitment to investing here. At the time, I highlighted how the U.S. once manufactured nearly 40% of the world's chips, but today barely produces 10%. This agreement will not only reshape our economy but will also create tens of thousands of jobs by the decade's end."
The administration's decision is rooted deeply in national interest. Currently, the U.S. remains vulnerable to global supply chain disruptions, particularly for semiconductors, which are integral for technologies spanning from smartphones to advanced military equipment. The CHIPS and Science Act aims to remedy the gap by supporting domestic manufacturing and ensuring national security.
Both U.S. Senators from Arizona, Mark Kelly and Kyrsten Sinema, expressed strong support for this investment. Senator Kelly stated, "With this final agreement, Arizona is on track to become one of the global leaders for advanced semiconductor manufacturing. The jobs created through this funding will also strengthen our national security." Meanwhile, Senator Sinema remarked, "I am proud to see the CHIPS and Science law come to fruition, ushering transformational investments for Arizona. This is not only about jobs but about securing our nation’s technological future."
Governor Katie Hobbs echoed these sentiments, highlighting the broader impacts of this investment. Hobbs said, "The milestone achieved today will create thousands of good-paying jobs and demonstrate Arizona's leadership role within the American manufacturing resurgence. Each chip produced here will play a role in empowering our entire nation’s technology infrastructure."
Beyond job creation, this step is significant for delineations within the semiconductor production process. TSMC plans to produce cutting-edge chips using advanced process technologies, including the 4-nanometer and 2-nanometer technologies at its upcoming plants. These nanoscale advancements are pivotal, allowing for the manufacture of smaller, faster, and more efficient chips, which are at the heart of modern devices.
Commerce Secretary Gina Raimondo highlighted the competitive edge this agreement is expected to confer, emphasizing it as one of the most significant milestones under the CHIPS Act. “When we started this, some believed advancements would remain overseas. TSMC’s commitment to establish its most advanced manufacturing capabilities here is sure to inspire other companies.” She remarked on the U.S. needing to play both offense and defense, ensuring technology remains domestic.
Interesting facets of the funding agreement include provisions for TSMC to share excess profits with the U.S. government under what is referred to as the "upside sharing agreement." TSMC has also committed to forgo stock buybacks for five years to prioritize long-term investments over short-term financial gimmicks.
Overall, the announcement of the funds marks the completion of the first major award under the $52.7 billion chip incentive program established through the CHIPS Act. This initiative reflects the U.S. government's strategy to not only increase domestic production but also revitalize local economies across various states.
With all eyes on the semiconductor industry, the focus intensifies not just on Arizona but also on the United States' future capability to lead globally. By fostering advanced manufacturing conditions and encouraging technological innovation, the hope is to create sustainable, long-term job growth and secure America’s leading position within the overarching global economy.
All of these developments, of course, come amid uncertainties surrounding political shifts and potential changes to economic policies, particularly with the upcoming transition to the Trump administration. Many industry analysts and watchers are curious about how these policies will play out and influence existing agreements like the CHIPS Act.