The U.S. Commerce Department has finalized a $6.6 billion subsidy for Taiwan Semiconductor Manufacturing Co. (TSMC) to support its advanced semiconductor production in Phoenix, Arizona. The finalized contract, following a preliminary agreement in April, represents the first major allocation under the $52.7 billion Chips and Science Act introduced in 2022. The announcement comes shortly before President-elect Donald Trump, a critic of the program, takes office.
In April, TSMC pledged to increase its planned investment in Arizona by $25 billion, raising it to $65 billion, and committed to building a third fabrication plant in the state by 2030. The company plans to manufacture cutting-edge 2-nanometer chips at its second Arizona facility, which is expected to begin operations in 2028. Additionally, TSMC will deploy its advanced “A16” chipmaking technology at this site.
“There were skeptics who doubted TSMC would bring anything beyond 5- or 6-nanometer technology to the U.S.,” Commerce Secretary Gina Raimondo said. “Instead, they’re committing to their most advanced semiconductor production here.”
The agreement includes up to $5 billion in low-interest government loans, with payments tied to project milestones. At least $1 billion is expected to be disbursed by the end of the year, according to officials. As part of the deal, TSMC has agreed to pause stock buybacks for five years, with limited exceptions, and share excess profits with the U.S. government under an “upside sharing” framework.
TSMC CEO C.C. Wei stated that the agreement would accelerate the development of cutting-edge semiconductor technology in the U.S. Raimondo emphasized that the Chips Act, passed by Congress in 2022, was crucial in securing TSMC’s commitment, noting that no leading-edge chips are currently manufactured domestically. “This didn’t happen on its own,” Raimondo explained, adding that the government had to persuade both TSMC and American companies to support U.S.-made chips. “The market doesn’t factor in national security.”
The Commerce Department has allocated $36 billion for semiconductor projects, including $6.4 billion for Samsung in Texas, $8.5 billion for Intel, and $6.1 billion for Micron. These agreements are expected to be finalized before President Biden leaves office on January 20.
Meanwhile, it was reported that TSMC was directed to halt advanced chip shipments to Chinese customers, though Raimondo declined to confirm such an order. She highlighted the dual strategy of boosting U.S. production (“offense”) while restricting the sale of advanced technology to China (“defense”). “We take national security seriously and investigate any potential risks, whether involving subsidized companies or not,” she concluded.
