The logo of Taiwan Semiconductor Manufacturing Company (TSMC) is seen during the opening ceremony of the TSMC global RnD Center in Hsinchu on July 28, 2023. (Photo by Amber Wang / AFP)
Amber Wang | Afp | Getty Images
The US Commerce Department said on Friday it had finalized a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Co’s US semiconductor manufacturing unit in Phoenix, Arizona.
The binding contract – after the first agreement announced in April – is the first major award to be completed under the $52.7 billion program set for 2022.
It comes just weeks before President-elect Donald Trump, who has criticized the plan, takes office.
In April, TSMC agreed to increase its planned investment by $25 billion to $65 billion and add a third Arizona plant by 2030.
The Taiwanese company will produce the world’s most advanced 2 nanometer technology at its second Arizona facility which is expected to start production in 2028. TSMC also agreed to use its most advanced chip manufacturing technology called “A16” in Arizona.
“When we started this there were a lot of naysayers who said maybe TSMC would do 5 or 6 nanometer in the United States,” Commerce Secretary Gina Raimondo said in an interview. “They actually make their most sophisticated chips in the United States.”
TSMC’s award includes up to $5 billion in subsidized government loans.
TSMC
Under the agreement, TSMC will receive cash as it meets project milestones. Commerce expects to spend at least $1 billion on TSMC by the end of the year, a senior executive told reporters.
TSMC agreed to forego stock purchases for five years — subject to certain conditions — and share any excess profits with the US government under a “sharing agreement.”
TSMC CEO CC Wei said in a statement that the deal “helps us accelerate the development of the most advanced semiconductor manufacturing technology available in the US.”
Congress in 2022 approved the Chips and Science Act to increase domestic semiconductor output, which Raimondo called important for TSMC’s acquisition of other chip investments. No flagship chips are currently being manufactured in the United States.
“It didn’t happen by itself… We had to convince TSMC that they wanted to expand,” Raimondo said, adding that officials should get American companies to buy US-made chips. “The market has no price for national security.”
Commerce has allocated $36 billion to chip projects that include $6.4 billion Samsung in Texas, $8.5 billion Intel and $6.1 billion Micron technology. Commerce is working to finalize those deals before Biden leaves office on Jan. 20.
Reuters reported on Saturday that Commerce had ordered TSMC to halt shipments of advanced chips to customers in China.
Raimondo did not confirm that the department issued an order to TSMC but said that the United States needs to play offense and defense against China.
“Investing in TSMC to grow here is a crime – the defense ensures that neither TSMC nor any other company sells our highly sophisticated technology to China and violates our export controls,” Raimondo said, adding that he would not say TSMC broke the law.
“We take national security very seriously and look at all possible problems, whether they are from the companies we support or not,” he added.
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