The United States Department of Commerce on Monday proposed investing up to $6.6 billion to support the construction of a third Taiwan Semiconductor Manufacturing Company Limited (TSMC) fab in Arizona. This funding would be provided through the CHIPS and Science Act, aimed at promoting more domestic semiconductor production.
This move is part of a broader effort to increase manufacturing in the U.S., but it also raises concerns about potential tensions with China.
The proposed fab will be a greenfield facility, specifically designed for 2nm (or newer) architectures used in various applications such as computing, 5G/6G wireless communications, and AI. TSMC's subsidiary, TSMC Arizona, plans to complete the facility by the end of the decade.
The construction of this facility is expected to create over 20,000 jobs in the area, with around 6,000 manufacturing roles once the facility becomes operational.
US to award TSMC $6.6B in grants, $5B in loans to step up chip manufacturing in Arizona
Localizing manufacturing has been a priority for the Biden administration, especially after the vulnerabilities exposed in the global supply chain by the COVID-19 pandemic. The demand for semiconductor products continues to grow, with global sales reaching $47.6 billion in January 2024, a 15% increase from the previous year.
President Biden emphasized the importance of TSMC's investment in Arizona for strengthening semiconductor manufacturing in the U.S. to meet the needs of American technology companies and consumers.
While the U.S. government has also supported companies like Intel with funding, TSMC's significant market share and technological advancements have made it a key player. However, geopolitical concerns surrounding Taiwan's control and potential threats from China have raised alarms.
International criticism has been directed at suggestions of destructive actions against TSMC in the event of a conflict with China, highlighting the economic repercussions of such disruptions. TSMC serves major tech companies like Apple, Nvidia, Sony, MediaTek, AMD, Qualcomm, and Broadcom, showcasing its global impact.
Despite the investment in domestic manufacturing, TSMC's technological lead and global supply chain diversification remain critical for the U.S. to mitigate future risks from pandemics or geopolitical conflicts. The company recognizes the importance of expanding its operations in the U.S. to support its American customers and drive innovations in semiconductor technology.
As U.S.-China relations continue to evolve, the upcoming presidential election could bring about significant changes. Former actions by the Trump administration heightened trade tensions, impacting companies like Huawei. The potential disruption of TSMC's Taiwan-based production could have a major financial impact globally, underscoring the importance of stable international relations.
