In an effort to secure the U.S. semiconductor industry, President Joe Biden’s administration has finalized a $6.6 billion award to Taiwan Semiconductor Manufacturing Company (TSMC) to build chip factories in Phoenix, Arizona.
The announcement comes just two weeks after President-elect Donald Trump’s victory, signaling an effort to seal a deal before the new administration takes office.
TSMC, the world’s largest contract chip maker and supplier to major technology companies including Apple, NVIDIA, AMD and Qualcomm, plans to invest $65 billion to build three state-of-the-art semiconductor factories in Arizona.
The facilities are expected to create thousands of jobs and strengthen the United States’ position in the global semiconductor supply chain. TSMC’s first plant is expected to be fully operational within a few months.
“For the first time in decades, a U.S. manufacturing facility will produce the cutting-edge chips used in our most advanced technologies,” Biden said.
The $6.6 billion award to TSMC is part of the Chips and Science Act, one of Biden’s signature legislative achievements. Signed into law in August 2022, the bill allocates $52.7 billion for semiconductor research, manufacturing and workforce development in the US.
The timing of the award is critical; Trump’s previous statements have raised concerns that his incoming administration could try to derail subsidies aimed at supporting the domestic chip industry.
“The CHIPS deal is so bad,” Trump said The Joe Rogan Experience October 25 podcast. He accused Taiwan of gobbling up the U.S. chip industry and questioned the rationale behind giving “billions of dollars in chip manufacturing” to foreign companies.
“Taiwan took our chip business. I mean, how stupid are we? They took our entire chip business. They’re extremely rich,” Trump said. Bloomberg Businessweek in July.
Taiwan’s Economic Minister Kuo Jyh-huei denied the allegations, saying, “Of course, Taiwan is not stealing the chip industry from the US. The chips we made are ordered by American companies, which still have the highest gross margin. Trump might have had some misunderstanding about such things and we’ll clear it up.”
House Speaker Mike Johnson, who voted against the CHIPS bill, initially agreed with Trump’s sentiments and said he would work to repeal it if Trump was elected. But he backed down after fellow Republicans warned him about jobs at stake in their districts if the law were repealed.
The CHIPS Act aims to revive domestic chip manufacturing, reduce dependence on foreign suppliers and strengthen national security through initiatives such as providing a 25 percent tax credit for semiconductor manufacturing and capital investment in equipment.
“America invented the semiconductor and used to make nearly 40 percent of the world’s chips, but today we make only about 10 percent of the global supply — and none of the most advanced chips,” the White House said in a 2022 statement.
