TSMC Gets $11.6 Billion in US Grants, Loans for Chip Plants

The US plans to award Taiwan Semiconductor Manufacturing Co. $6.6 billion in grants and as much as $5 billion in loans to help the world’s top chipmaker build factories in Arizona, expanding President Joe Biden’s effort to boost domestic production of critical technology.

Under the preliminary agreement announced by the US on Monday, TSMC will construct a third factory in Phoenix, adding to two facilities in the state that are expected to begin production in 2025 and 2028. In total, the package will support more than $65 billion in investments at the three plants by TSMC, the go-to chipmaker for companies such as Apple Inc. and Nvidia Corp.

TSMC’s third fabrication site, or fab, will rely on next-generation 2-nanometer process technology, and is slated to be operational before the end of the decade. US Commerce Secretary Gina Raimondo said the 2nm chips are essential to emerging technologies including artificial intelligence, as well as for the military.

“For the first time ever, we will be making at scale the most advanced semiconductor chips on the planet here in the United States of America, by the way, with American workers,” Raimondo told reporters in a briefing ahead of the announcement. TSMC is planning to first make 2nm chips in Taiwan in 2025.

It will be months before TSMC receives any of the promised funding, as the company enters a due-diligence period before reaching a final, binding agreement. Money will then be disbursed based on construction and production benchmarks, and could be clawed back if TSMC doesn’t hold up its end of the deal.

TSMC’s award marks another milestone in Biden’s push to boost the US semiconductor industry with the 2022 Chips and Science Act. It’s one of the largest announced under the program, which set aside $39 billion in direct grants — plus loans and guarantees worth $75 billion — to persuade semiconductor companies to build factories in America after decades of shifting production abroad.

TSMC’s American depositary receipts rose as much as 2.8% Monday morning in New York to $145.35.

Intel Corp. has already inked a preliminary agreement for nearly $20 billion in grants and loans, while Samsung Electronics Co. of South Korea is expected to receive a grant of more than $6 billion. The Commerce Department has also handed three awards to companies that manufacture older-generation chips and is expected to announce a multibillion dollar package for Micron Technology Inc. in coming weeks.

https://finance.yahoo.com/news/tsmc-gets-11-6-billion-090000429.html