Dive brief:
- The White House awarded chip giant Taiwan Semiconductor Manufacturing Company $6.6 billion in CHIPS and Science Act funding, the Commerce Department announced Monday.
- TSMC will also build a third manufacturing plant in Phoenix, where it is already in the midst of building two semiconductor facilities, investing more than $65 billion in total.
- The third fab will produce chips using 2nm or more advanced processes, with production scheduled to start later in the decade, joining the other fabs opening in 2025 and 2028.
Diving knowledge:
TSMC’s capital infusion is one of the largest private investments in US history, representing the largest foreign direct investment in a greenfield project in the country to date.
At full capacity, the three factories are expected to produce tens of millions of advanced chips to power products such as 5G/6G smartphones, autonomous vehicles and AI data center servers.
The three projects are expected to create approximately 6,000 direct manufacturing jobs and more than 20,000 construction jobs. Fourteen of TSMC’s direct suppliers have also announced plans to build or expand plants in Arizona or elsewhere in the US
In addition to the $6.6 billion in CHIPS funding, TSMC will raise $5 billion in loans as part of the deal. The chip giant also plans to apply for Treasury Department investment tax credits of up to 25 percent of qualified capital spending on Arizona projects.
“The cutting-edge semiconductors that will be manufactured here in Arizona are critical to the technology that will define global economic and national security in the 21st century, including AI and high-performance computing,” said Commerce Secretary Gina Raimondo, in a statement.
TSMC is the second major chipmaker to receive billions of dollars in CHIPS funding as the Biden administration begins doling out money more aggressively. Intel received $8.5 billion in direct funds late last month, part of a package that included up to $11 billion in loans for its semiconductor projects in Arizona, New Mexico, Ohio and Oregon.
The projects are key aspects of the Biden administration’s pledge to make 20% of the world’s most advanced chips in the US by 2030.
But while the projects are intended to showcase the possibilities of reviving America’s manufacturing prowess, they also highlight one of the biggest challenges the country faces in developing the industry: finding skilled labor.
TSMC, for example, previously delayed the opening date of the first factory from late 2024 to 2025 due to a lack of available skilled labor. That announcement, however, drew an outcry from local unions, which criticized the company for trying to attract foreign workers.
The chipmaker reached an agreement with the Arizona Building and Construction Trades Council in January over labor, including a commitment by TSMC to prioritize hiring domestic workers and for the union to hire a sufficient number of qualified workers to meet the labor needs of the project.
The new CHIPS funding attempts to address this issue, with $50 million in funding for semiconductor and construction workforce development. TSMC will also use a registered apprenticeship program to achieve a 15% apprenticeship utilization rate at Phoenix construction sites.
