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The logo of Taiwanese chip giant TSMC is seen at southern Taiwan science park in Tainan, Taiwan.
TSMC gets billions to build in Phoenix
Taiwan Semiconductor Manufacturing Company will receive as much as $6.6 billion from the US government to expand its chip-making complex in Phoenix, Arizona. As part of the deal, TSMC will also receive $5 billion in loans and invest $65 billion to build a third factory in the complex. It’ll receive the money if it complies with due diligence requirements set forth by the 2022 CHIPS and Science Act, a $200 billion investment in America’s domestic semiconductor infrastructure.
TSMC, based in Taiwan, has become perhaps the world’s most important chip fabrication company. Chip designers like AMD and Nvidia — the two companies at the forefront of made-for-AI graphics chips — contract with TSMC to make their chips.
The government also sees its investment as a job-creator, with TSMC set to hire 20,000 people for construction and 6,000 for manufacturing, and $50 million of the grant will be set aside for job training programs.
The US sees chip infrastructure as a matter of huge national importance. “It’s a national security problem that we don’t manufacture any of the world’s most sophisticated chips in the United States,” Commerce Secretary Gina Raimondotold reporters. “Now, because of this announcement, these chips will be made in the United States."
TSMC remains at the heart of Taiwan's “Silicon Shield,” the protection that semiconductor dominance provides the island nation by giving the United States good reason to protect it from Chinese attack. Could shifting more of TSMC’s production to Arizona eliminate that incentive?
That's unlikely, says Xiaomeng Lu, a director of Eurasia Group’s geo-technology practice. "TSMC will always keep their most advanced capacity in Taiwan, and their pledge of making 2nm chips is not legally binding," she says. So while "it may run the risk of thinning the silicon shield if fully materialized, weakening it is less likely."
Semiconductor chips on a circuit board.
Crunch time for chipmakers
The Biden administration wants to supercharge US chip manufacturing, which is why the 2022 CHIPS Act allotted $280 billion for the domestic chipmaking sector. But Republicans in Congress just halted a key provision of the administration’s plan.
Under the latest iteration of the National Defense Authorization Act, Republicans blocked a line item that would have allowed semiconductor companies building new plants to bypass the typical environmental permitting process. It’s something that Commerce Secretary Gina Raimondo had pushed for as a means of streamlining and speeding up the process. “We are not in any way suggesting that we should do anything that hurts the environment,” she insisted in Senate testimony. Republican Ted Cruz and Democrat Mark Kelly championed it in the Senate, and more than 100 lawmakers signed a letter advocating for it to be included in the final version of the bill.
But House Republicans, who largely oppose the permitting process in general, weren’t so concerned over whether the plants would uproot some Gila monsters. Rather, they say they are dismayed over what they called a permitting “carve-out” for the chip industry.
This exclusion could mean a major slowdown for domestic and foreign chipmakers looking to pour money into US building projects, namely Taiwan Semiconductor Manufacturing Company, Intel, and Samsung, which are building new plants in Arizona, Ohio, and Texas respectively.