U.S. Secures $6.6 Billion Subsidy Agreement with TSMC for Semiconductor Production in Arizona
The U.S. Department of Commerce has finalized a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Company (TSMC) to support its semiconductor production operation in Phoenix, Arizona. This substantial agreement marks the first significant contract under the $52.7 billion funding initiative established by the government in 2022 aimed at enhancing domestic semiconductor manufacturing.
As part of the agreement, TSMC has committed to boosting its investment from an initial $25 billion to $65 billion by 2030, which will include the construction of a third wafer factory in Arizona. This new facility is expected to manufacture cutting-edge 2nm technology and is set to commence production in 2028. TSMC will also implement its advanced "A16" process at the Arizona site.
The subsidy package includes up to $5 billion in low-cost loans and provides TSMC with cash incentives tied to the achievement of specific project milestones. The Department of Commerce anticipates disbursing at least $1 billion to the company by the close of this year.
In exchange for the subsidy, TSMC is required to refrain from stock buybacks for five years and engage in a profit-sharing agreement with the U.S. government, sharing excess profits generated. TSMC CEO C.C. Wei highlighted the deal’s potential to expedite the development of advanced semiconductor manufacturing technology in the U.S.
According to Commerce Secretary Gina Raimondo, securing TSMC’s investment is critical, as the U.S. currently lacks the capacity to produce advanced chips. The government’s broader initiative includes allocating $36 billion for chip projects, with significant funding directed towards other key manufacturers such as Samsung, Intel, and Micron Technology. The Commerce Department aims to finalize these agreements before President Biden’s term concludes in January.
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