The Biden administration has taken a significant step in bolstering America’s semiconductor industry by finalizing its $6.6 billion CHIPS Act incentives for Taiwan Semiconductor Manufacturing Co. (TSMC). This move positions TSMC as the first major recipient under the initiative, designed to expand domestic semiconductor production and reduce reliance on foreign supply chains.
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TSMC will use the funding to support the construction of a $65 billion three-factory complex in Arizona, a project expected to create tens of thousands of jobs. The company has already secured a $5 billion loan from the U.S. government to complement the grants. According to Bloomberg, TSMC will receive $1 billion of the incentives by the end of 2024, having satisfied preliminary requirements for the program.
President Joe Biden lauded the agreement, stating:
“Today’s final agreement with TSMC—the world’s leading manufacturer of advanced semiconductors—will spur $65 billion of private investment, create tens of thousands of jobs, and ensure the U.S. remains a leader in technological innovation. The first facility is on track to open early next year.”
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TSMC’s relationship with the U.S. government is not without scrutiny. Recent reports revealed allegations of TSMC chips indirectly aiding Huawei, a company under U.S. sanctions. TSMC has firmly denied any partnership with Huawei and has ceased the production of advanced AI chips for certain Chinese clients to underscore its commitment to U.S. interests.
Looking Ahead: Pressure Mounts on CHIPS Act Implementation
While TSMC advances its projects, other semiconductor giants like Intel and Samsung await their own CHIPS Act approvals. Business groups are urging the administration to expedite these agreements to maintain momentum and prevent renegotiation under a new administration.
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