Biden Secures $6.6B for TSMC Chip Factories, Thwarting Trump’s CHIPS Act Rescission

WASHINGTON – The Biden administration has finalized a substantial $6.6 billion award for Taiwan Semiconductor Manufacturing Company (TSMC), which is developing significant manufacturing facilities in Phoenix, Arizona. This move comes amidst concerns about the potential impact of President-elect Donald Trump on domestic chip industry subsidies.

Secretary of Commerce Gina Raimondo described the announcement as “gigantic” and emphasized its importance for both economic and national security during a press call shortly before the announcement.

TSMC, one of the largest semiconductor manufacturers globally, intends to invest $65 billion in constructing three cutting-edge fabrication plants in Arizona, a project anticipated to create thousands of jobs. Semiconductors are critical components in numerous technologies, including computers, smartphones, autonomous vehicles, and various household appliances.

Officials highlighted the pressing nature of this funding amidst Trump’s impending inauguration. Lael Brainard, director of the National Economic Council, indicated that additional Commerce Department awards would be announced in the coming months to maintain momentum through the decade’s end.

The $6.6 billion grant, along with up to $5 billion in loans, arises from the CHIPS and Science Act, signed into law by President Biden, which allocated $52.7 billion towards semiconductor research and manufacturing in the U.S.

TSMC’s significant investment is vital for the U.S. tech industry, with the company supplying chips to major players such as Apple, NVIDIA, and AMD. However, comments from Trump, who previously expressed concerns over TSMC receiving U.S. funds, have led to investor unease.

Despite earlier opposing the CHIPS Act, House Speaker Mike Johnson had to reconsider his stance amid warnings from colleagues regarding the potential job losses in their districts.

Production at TSMC’s first Arizona facility began in April, following the company’s announcement of the project in May 2020. The second fab was publicly declared in December 2022, with production slated to commence in 2028, and another fab announcement made in April accompanying federal subsidy discussions.

To qualify for the funding, TSMC must achieve certain construction and production milestones. According to Michael Schmidt of the Commerce Department, the company is on track to receive at least $1 billion by year’s end and will continue to receive funds as the project progresses.

Ryan Harper, White House CHIPS implementation coordinator, confirmed the binding nature of the agreement, stating that the government will uphold its commitments as long as TSMC meets its targets.

Early production outputs at the Arizona fab appear to match or exceed those from TSMC’s facilities in Taiwan, a promising sign cited by analysts. Raimondo praised the project’s advancements, calling the progress “unbelievable” and affirming its unprecedented nature within the U.S.

TSMC’s investment marks the largest foreign investment in U.S. history, according to the White House. President Biden highlighted that while semiconductors originated in the U.S., only 10% are now produced domestically; the most advanced chips are manufactured overseas. Once operational, the Arizona facility will enable American production of high-tech chips for the first time in decades.