TSMC Secures $1.5 Billion U.S. Chip Subsidy
In a recent development, TSMC has secured a $1.5 billion subsidy from the U.S. government for its expansion plans in the United States. This funding comes amid expectations that the new U.S. administration, under President Trump, will continue to support TSMC's U.S. investment projects, particularly those involving subsidies that have already been finalized.
On November 15, 2024, as the Biden administration was preparing to transition out of office, TSMC officially signed an agreement with the U.S. government. Under this agreement, the U.S. Department of Commerce will provide TSMC's Arizona subsidiary, TSMC Arizona, with up to $6.6 billion in direct funding and $5 billion in loans. This support is part of the U.S. government's efforts to bolster semiconductor manufacturing capacity on American soil through the CHIPS and Science Act, which is intended to support TSMC's $65 billion investment in building three semiconductor fabs in Arizona.
TSMC Chairman C.C. Wei addressed concerns about the progress of its U.S. investments during a conference call on January 16, 2025. Wei stated that TSMC has had strong communication with both the Biden and Trump administrations, receiving promises of support from federal, state, and local government levels. He emphasized that TSMC's advanced processes would remain focused on Taiwan for mass production, given the incomplete U.S. supply chain ecosystem. However, the company is actively engaging with the U.S. government to expand its ecosystem and gradually close the technological gap, ensuring that not all advanced processes will be moved to the U.S.
TSMC's Chief Financial Officer Wendell Huang further elaborated in a CNBC interview that the company had already received the first batch of government subsidies, amounting to $1.5 billion. Huang also noted that despite some production delays, TSMC's first Arizona facility began producing advanced chips in the fourth quarter of 2024, while the other two fabs are under construction, with the second slated to begin production in 2028.
TSMC's Arizona investment began with an initial announcement in May 2020 for its first plant in the state, and in 2023, the company announced plans for a second plant, bringing the total investment to $40 billion. In April 2024, TSMC expanded its plans, adding a third fab in Phoenix, bringing the total investment to $65 billion. This expansion is expected to create over 25,000 direct jobs in construction and manufacturing, as well as thousands of indirect jobs, contributing to the U.S. goal of producing 20% of the world’s most advanced logic chips by 2030.
The three fabs will include a 4nm process facility, with mass production expected to start in the first half of 2025 (delayed from the original 2024 timeline). The second fab, designed for 3nm technology, was originally scheduled to begin production in 2026 but has been pushed to 2028. Once completed, these two fabs will have an annual production capacity of over 600,000 wafers, with an estimated market value of more than $40 billion for the final products. The third fab, which will produce 2nm or more advanced process technologies, is projected to begin mass production by the late 2020s (2029–2030).
This move is part of the U.S. government's broader strategy to strengthen domestic semiconductor manufacturing capabilities. The subsidies and low-interest loans provided under the CHIPS and Science Act are aimed at advancing semiconductor production in the U.S. and enhancing the global competitiveness of the semiconductor industry.
