TSMC snags $6.6 billion in CHIPS Act funding to open three factories in Arizona

The goal is for the company to manufacture “advanced chips that are made entirely on US soil.”

Rebecca Noble via Getty Images

President Biden’s CHIPS Act money continues to get doled out to semiconductor manufacturers. The White House just announced that the Taiwan Semiconductor Manufacturing Company (TSMC) is receiving $6.6 billion in grants to build three fabrication plants, otherwise called fabs, in the region of Phoenix, Arizona. This is in addition to around $5 billion in government loans.

As part of this deal, TSMC agreed to expand its planned investment in Arizona by $25 billion, to $65 billion. The company already announced two of the three factories it is building in the state, with a third promised by 2030. The White House says this represents the largest foreign direct investment in Arizona’s history, with expectations to bring 6,000 high-wage tech jobs and 20,000 construction jobs to the state.

One nifty aspect of these factories is that they’ll allow TSMC to complete every aspect of the chip-making process on US soil, including advanced packaging. I’m not talking about slapping a box and warranty information around the chip. In this context, packaging refers to arranging the various components to build the final product, in addition to adding power, inputs and outputs. As things currently stand, even components that are made in America are sent back to Taiwan for packaging and then mailed across the world yet again for the final sale. These Arizona factories will, eventually, put a stop to all of that jet-setting.

Once all three factories are humming along, they will reportedly manufacture tens of millions of chips to power products like smartphones, autonomous vehicles and, of course, AI datacenter servers. Future iPhones and Macs will use 4nm and 3nm chips made at the Phoenix plants, thanks to a partnership with Apple. TSMC has already reported some delays with the first two factories, but the current plan is for the first fab to be fully operational by next year, with the second to follow in 2028 and the third by 2030.

The White House says this investment, along with other CHIPS Act grants and loans, will turn the US into a global chip-making powerhouse. The federal government suggests that the US will manufacture 20 percent of the world’s leading-edge chips by 2030.

“America invented these chips, but over time, we went from producing nearly 40 percent of the world’s capacity to close to 10 percent, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities”, said President Biden.

One of the main goals of the CHIPS Act is to lure global chipmakers to build on US soil, and it looks like it’s working. Last week, Samsung announced it would be doubling its investment in Texas to $44 billion, with plans for an ambitious expansion. The multinational semiconductor company GlobalFoundries received a grant of $1.5 billion to help pay for a new fabrication facility in New York that will handle the manufacture of chips for the automotive, aerospace, defense and AI industries. Intel recently received the largest CHIPS grant to date, snatching up to $8.5 billion to continue various US-based operations.