Biden Administration to Award $6.6 Billion Grant to TSMC for U.S. Chip Manufacturing Hub

It is worth noting that the US elections are coming up very shortly and the current US President Joe Biden is looking to make a significant move aimed at enhancing domestic semiconductor production by giving a grant up to $6.6 billion to Taiwan Semiconductor Manufacturing Company (TSMC), a global leader in advanced microchip manufacturing. The funding, sourced from the bipartisan CHIPS and Science Act, is intended to support the establishment of TSMC’s major U.S. hub in Phoenix, Arizona.

TSMC’s commitment to building two semiconductor plants at the Phoenix site is already underway. With the additional grant, the company plans to expand its operations by constructing a third factory. This initiative will contribute to TSMC’s increased investment in the United States, with total investments expected to surpass $65 billion, up from the previously committed $40 billion.

The centerpiece of this investment is the production of cutting-edge two-nanometer chips, a significant advancement considering the absence of such technology in current U.S. semiconductor manufacturing capabilities. Federal officials emphasize the strategic importance of bringing state-of-the-art chip fabrication to American shores to ensure a reliable domestic supply of semiconductors, crucial components that power a wide array of modern technologies including smartphones, computers, automobiles, and defense systems.

The award to TSMC represents the second-largest federal grant under the CHIPS Act, a legislative initiative passed in 2022 aimed at revitalizing U.S. semiconductor manufacturing. This funding comes on the heels of another major grant to Intel, another prominent chipmaker, signaling a concerted effort by the government to reestablish U.S. leadership in this critical industry.

President Biden’s economic policy agenda places a strong emphasis on strengthening American manufacturing, with the semiconductor sector being a key focus. The CHIPS Act allocated $39 billion to the Commerce Department for incentivizing chip manufacturing investments across the country.

The move to support TSMC’s expansion aligns with broader efforts to reduce reliance on overseas semiconductor production, given that only about 10 percent of the world’s chips are currently manufactured in the United States. However, at a time when the elections are very close, this move will also be looked upon as a political one to appease the vote banks that have elected him for being less reliant on China.