TSMC to get $6.6 bn direct federal funding for Arizona chip project

Close on the heels of US government offer of financial assistance to Intel for expansion and modernisation of its production lines in California, Taiwan Semiconductor Manufacturing Company (TSMC) also said it will receive up to $6.6 billion in direct funding from the US federal government for setting up a state-of-the-art semiconductor plant in Phoenix, its third unit in Arizona.

TSMC on Monday announced the signing of a non-binding preliminary memorandum of terms (PMT) with the Department of Commerce, under which it will receive up to $6.6 billion in federal funding under the CHIPS and Science Act. 

The PMT also provides for up to $5 billion in loans and up to 25 per cent in investment tax credits from the US Treasury Department for the Arizona plant.

TSMC said the new plant in Arizona will help the company meet strong customer demand by leveraging the most advanced semiconductor process technology.

TSMC is currently engaged in the construction of a subsidiary Fab unit, its second plant in Arizona, and the proposed Phoenix plant will bring the total number of TSMC’s fab units in Arizona to three. The company’s total investment in the new plant will be about $65 billion – the largest single investment in Arizona and the largest foreign direct investment in the United States.

TSMC chairman Mark Liu said the financial support being provided under the CHIPS and Science Act will help the company invest in some of the most advanced semiconductor manufacturing technologies and enable the company to be a leader in semiconductor technology.

The three fabs in Arizona will create about 6,000 high-tech, high-paying jobs, besides creating a vibrant globally competitive semiconductor ecosystem in the US, according to TSMC.

The Greater Phoenix Economic Council expects the investment in the three plants to create more than 20,000 construction jobs, and tens of thousands of indirect supplier and consumer jobs.

TSMC’s first fab in Arizona is expected to begin production of 4nm chips in first half of 2025 while the second fab will start producing the most advanced 2nm chips, with next-generation nanosheet transistors as well as the 3nm chips, sometime in 2028. 

The third fab will be using the most advanced chip technology and production is expected to start by the end of the decade. 

TSMC said it has set green manufacturing as its global standard as the company constantly strives to improve energy efficiency, water conservation, waste management, and air pollution control

Yet, the company said, it remains focused on its long-term financial goals of 15-20 per cent compound annual growth in revenue, 53 per cent or higher gross margin, and 25 per cent or higher return on investment.

TSMC, however, said its overseas investment are subject to regulatory approvals in Taiwan.