TSMC Expands Arizona Chip Plans Under $6.6bn US Deal

The US government has announced a $6.6 billion (£5.2bn) grant to Taiwan Semiconductor Manufacturing  Co. (TSMC) as the contract chip-making giant expands its plans to include a third manufacturing plant in Phoenix, Arizona.

The plant is intended to manufacture 2 nanometre chips, currently “the world’s most advanced semiconductors”, by the end of the decade – although it is unclear whether those chips would remain on the cutting edge by that time.

TSMC is expected to begin bringing 2nm technology into mass production next year.

The US is making an additional $5bn loan available to TSMC as part of the deal, which sees the company’s total investment in its Arizona facilities rising to $65bn from a previous $40bn.

Arizona complex

TSMC began constructing its complex outside of Phoenix in 2021 with plans for two plants, with the first now expected to begin production in the first half of next year.

The second plant, now expected to use 2nm technology, is planned to begin production in 2027 or 2028, TSMC’s chairman said in January.

TSMC had originally planned to begin production in Arizona this year, but the schedule has been pushed back by shortages of skilled labour.

The latest award includes $50m for workforce development, the US Department of Commerce said.

Geopolitical tensions

The project is expected to involve more than 20,000 construction jobs and to create 6,000 permanent jobs and has brought in more than a dozen suppliers to TSMC, the department said.

The award is the third major grant under the US Chips and Science Act, signed into law in 2022, that seeks to bring more chip manufacturing within the borders of the US.

GlobalFoundries and Intel have received large grants and Samsung is expected to receive billions in subsidies for chip investment plans in Texas.

The country currently makes less than 10 percent of the world’s semiconductors and none of the most advanced chips.

‘Renewed commitment’

The Commerce Department said the US is on track to produce 20 percent of the world’s cutting-edge chips by 2030.

“TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day,” US president Joe Biden said in a statement.