The White House has finalized an agreement to award a $6.6 billion CHIPS Act grant to Taiwan Semiconductor Manufacturing Co. and plans to disburse $1 billion to the chipmaker by the end of the year to support its Arizona factory site.
The U.S. Department of Commerce on Friday said the award to TSMC Arizona is based on the company’s completion of project milestones for its $65 billion site under construction in north Phoenix.
In April, the Department of Commerce entered into a nonbinding preliminary agreement with TSMC (NYSE: TSM) for a CHIPS Act award package that consists of the $6.6 billion grant and a $5 billion loan, along with a tax credit for a portion of the company’s capital expenditures that could bring the total federal commitment to more than $27 billion, the Business Journal previously reported.
In a teleconference call with reporters Thursday, U.S. Secretary of Commerce Gina Raimondo called TSMC’s federal grant award “one of the most important investments the U.S. will make to advance its economic and national security” because the company will make leading-edge chips for artificial intelligence applications, quantum computing and sophisticated military equipment.
“America is at the forefront of AI because we are the home to leading AI companies and now we can say — because of this investment in TSMC Arizona — we’ll be making these chips in the United States with American workers,” she said. “We have a high degree of confidence in this investment because we’re already seeing the impact in Arizona.”
TSMC targets mass production in 2025
TSMC’s Arizona fab began engineering wafer production in April with N4 process technology. Last month, the fab reached a trial production rate that’s on par with TSMC’s Fab 18 in Tainan, Taiwan, the Business Journal previously reported.
TSMC will begin mass production at its Arizona fab site at the beginning of 2025 and operations are expected to begin at TSMC’s second factory in 2028. The company’s second fab will produce 2 and 3 nanometer process technologies for AMD, Apple, Nvidia and Qualcomm.
Earlier this year, the international semiconductor giant increased its investment in its Arizona fabs from $40 billion to $65 billion as it plans to build a third facility by the end of the decade that will produce 2-nanometer chips to power smartphones, data centers and artificial intelligence applications.
Federal officials expect $1 billion of its $6.6 billion grant to “go out the door” to the chipmaker by the end of the year, a senior U.S. Department of Commerce official said in the teleconference call with reporters.
The Department of Commerce (DoC) arranged the call under the condition the official not be identified.
In addition to a CHIPS Act grant, the Department of Commerce confirmed that TSMC plans to take the $5 billion loan as part of its federal award package.
“Entering this phase of the U.S. CHIPS and Science Act marks a pivotal step in strengthening the semiconductor ecosystem in the United States,” C.C. Wei, chairman and CEO of TSMC, said in a statement. “TSMC appreciates the continual collaboration with customers, partners, local communities and the U.S. government beginning in early 2020. The signing of this agreement helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S.”
Officials tout bipartisan support for CHIPS Act
TSMC’s award comes on the heels of business groups calling for distribution of CHIPS Act funds and criticism of the program from President-elect Donald Trump, who accused Taiwan of stealing the U.S. chip industry during an appearance on “The Joe Rogan Experience” podcast in October.
Last month, business groups in Ohio, New York, Oregon, and New Mexico sent President Joe Biden a letter asking him to distribute CHIPS Act funds within 30 days, stating the award packages to domestic chipmakers are “long overdue,” Barron’s reported.
A Department of Commerce official said the timing of its CHIPS Act award disbursement to TSMC is part of a process the department “laid out from the beginning.”
“We accept an application. We do our merit review. We negotiate a (preliminary memorandum of terms) that would kick off a due diligence session and then we ultimately result in a final award agreement with the company,” the official said. “And so that process has taken its course. As these things get executed, we will be announcing it.”
The Department of Commerce official also pointed to bipartisan backing for the CHIPS Act, which received letters of support from members of U.S. Congress on both sides of the aisle.
Arizona Sen. Mark Kelly, a key negotiator of the CHIPS Act, called TSMC’s final agreement for CHIPS Act funding a “win for Arizona’s economy.”
“For the first time, the advanced microchips that power America’s military and tech innovators will be made here at home,” Kelly said in a statement. “These investments through the CHIPS and Science Act have us on track to double America’s share of the global microchip market by 2030, strengthening national security, bringing supply chains back to the U.S., and creating tens of thousands of good paying jobs, many of which won’t require a four-year degree.”
White House to finalize more CHIPS Act agreements in coming months
TSMC’S disbursement is the second to be finalized by the Department of Commerce. Last month, federal officials finalized a $123 million CHIPS Act grant for Polar Semiconductor to expand its manufacturing plant in Minnesota.
To date, the Department of Commerce has allocated $36 billion in grants to companies — including Intel Corp., Amkor Technology and Microchip Technology — from a total of $39 billion intended to spur semiconductor manufacturing in the U.S.
On an earnings call earlier this month, Microchip Technology CEO Ganesh Moorthy said the company was making progress in negotiations with federal officials for CHIPS Act funding and expects a final agreement to occur before December.
The Department of Commerce in January inked a preliminary agreement with Microchip for $162 million in CHIPS Act incentives, the Business Journal previously reported.
In addition, federal officials entered a preliminary agreement with Amkor for $600 million in CHIPS Act subsidies to support the company’s plans for a semiconductor advanced packaging and testing facility in Peoria, while Intel was awarded $8.5 billion in direct funding via the CHIPS Act to support the company’s semiconductor advanced packaging and manufacturing facilities in Arizona and three other states.
“We will continue to make PMT announcements in terms of allocating those funds in the months to come,” the Department of Commerce official said.
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Source: politics.einnews.com…
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