The Biden administration has finalized a $6.6 billion grant for Taiwan Semiconductor Manufacturing Company (TSMC), bolstering the company’s ambitious $65 billion investment in three cutting-edge semiconductor fabrication plants in Phoenix. The move solidifies the administration’s efforts to advance domestic chip production amid uncertainty over how President-elect Donald Trump will approach the CHIPS and Science Act.
“This is a gigantic announcement,” Secretary of Commerce Gina Raimundo said Friday, hailing the deal as “one of the most important investments that we make as a country to advance our economic and national security.”
Historic Investment in Semiconductor Production
TSMC’s Arizona facilities, the largest foreign investment in U.S. history, will play a critical role in producing chips for technologies ranging from cell phones and artificial intelligence to fighter jets and self-driving cars. Early production at the first fab has already matched Taiwan’s benchmarks, with operations set to expand over the coming years.
President Biden, who signed the CHIPS and Science Act in 2022, noted that only 10% of semiconductors are manufactured in the U.S., with all advanced chips produced overseas. The first TSMC fab in Phoenix will soon begin producing leading-edge chips, marking a major step forward for American manufacturing.
Funding and Future Milestones
The $6.6 billion federal grant, part of the $52.7 billion CHIPS Act funding, will be distributed as TSMC meets construction and production milestones. The company has already qualified for $1 billion by year’s end, with additional payouts tied to progress on its three Arizona plants, which are expected to be fully operational by 2028.
The project also includes up to $5 billion in loans, ensuring TSMC has the resources to meet its ambitious goals.
Political Implications
The announcement comes as the Biden administration moves quickly to finalize funding amid concerns about Trump’s potential rollback of subsidies for foreign semiconductor companies. Trump and other Republicans have criticized the CHIPS Act, but pressure from lawmakers whose districts benefit from semiconductor jobs has tempered calls for repeal.
“This binding contract ensures that as long as milestones are met, the government will support this vital project,” said Ryan Harper, the White House CHIPS implementation coordinator.
A New Era for U.S. Chip Manufacturing
TSMC’s investment promises to transform Arizona into a hub for semiconductor production, creating thousands of jobs and reducing the nation’s reliance on foreign chipmakers.
“Even though it has never been done before in the U.S., it’s being done now,” Raimundo said. “To all the naysayers, I say: It’s happening. The proof is in the pudding.”