TSMC: $6.6B US Subsidy, 2nm Chip Production

In a landmark move to strengthen domestic semiconductor manufacturing capabilities, the U.S. government has unveiled a significant $6.6 billion subsidy earmarked for Taiwan Semiconductor Manufacturing Company (TSMC), a global leader in chip production.

Under this initiative, TSMC has committed to expanding its investment in the United States, with plans to increase its initial $40 billion investment by over 60%, reaching a total investment exceeding $65 billion. This investment surge will facilitate TSMC's production of cutting-edge 2nm chips on American soil, marking a pivotal advancement in semiconductor technology.

Reports confirm that TSMC will embark on the construction of a previously undisclosed third chip fabrication facility in Phoenix, Arizona, expected to commence operations by 2030. This strategic expansion, coupled with TSMC's augmented investment, positions the United States to potentially produce approximately 20% of the world's most advanced semiconductor chips by the end of the decade.

Furthermore, TSMC will secure a $5 billion loan and will be eligible to apply for a 25% investment tax credit for capital expenditures, fostering a conducive environment for sustained growth and innovation.

The announcement has also spurred significant industry interest, with 14 suppliers poised to establish or expand facilities in Arizona or elsewhere in the United States to support TSMC's manufacturing operations. Given that 70% of TSMC's clientele comprises U.S. companies, there exists a clear demand for domestically produced semiconductor chips.

TSMC's forthcoming facilities will play a pivotal role in meeting this demand, with the first facility in Arizona scheduled to commence production of 4nm chips in 2025. Subsequently, TSMC's second facility, initially slated for 3nm chip production, will now also produce 2nm chips, with production set to begin in 2028. The company's third facility will specialize in producing 2nm chips, as well as more advanced semiconductor technologies.

The subsidy provided to TSMC is the second-largest allocation under the CHIPS and Science Act, following only the $8.5 billion subsidy and $11 billion loan provided to Intel.