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TSMC bags $6.6 billion in Biden’s CHIPs Act, will set up three factories in the US State of Arizona

The US government is betting big on the Taiwan Semiconductor Manufacturing Company, or TSMC, as it awards $6.6 billion in grants to establish three fabrication plants, or fabs, in Phoenix, Arizona.

This funding is in addition to the approximately $5 billion in government loans that TSMC has already secured.

As part of the agreement, TSMC has committed to increasing its planned investment in Arizona by $25 billion, bringing the total to $65 billion.

The company has already disclosed plans for two of the three factories in the state. It is expected that the third factory will be set up by 2030.

The Biden-led White House has described TSMC’s investments in its upcoming semiconductor factories as the most significant foreign direct investment in Arizona’s history. Experts project that the factories will create at least 6,000 high-wage tech jobs and 20,000 construction jobs in the state.

An essential aspect of these facilities is that they will enable TSMC to complete the chip-making process on US soil, including advanced packaging.

Traditionally, even advanced components, like silicon wafers, made in the US had to be sent to Taiwan for the final slicing and packaging of the wafers into chips before being shipped back to the US and other countries worldwide for final sale.

With its factories in Arizona, TSMC hopes to bypass this logistical nightmare.

Once operational, the factories are expected to produce millions of chips for applications such as smartphones, autonomous vehicles, and AI data center servers.

Apple has partnered with TSMC and plans to develop their 4nm and 3nm Apple Silicon chips at TSMC’s Phoenix plants for future iPhones and Macs.

Although some delays have been reported with the initial factories, the current timeline aims for the full operation of the first fab by next year, followed by the second in 2028 and the third by 2030.

The White House hopes that with TSMC’s factories, investments, and all other CHIPS Act grants and loans issued so far, the US can be established as a strategically located chipmaking destination.

President Biden emphasized the importance of reclaiming America’s position in chip production, citing a decline from nearly 40 percent of global capacity to close to 10 percent, particularly in advanced chip manufacturing, which poses economic and national security risks.

One key objective of the CHIPS Act is to attract international chipmakers to invest in US facilities, a goal that seems to be succeeding. Samsung recently announced a $44 billion investment in Texas, doubling its existing commitment.

Additionally, GlobalFoundries received a $1.5 billion grant for a new facility in New York, focusing on chips for the automotive, aerospace, defense, and AI sectors. Intel secured the largest CHIPS grant to date, totaling up to $8.5 billion for its US-based operations.

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