TechUS invests $6.6 billion in TSMC Arizona plants to boost chip security

US invests $6.6 billion in TSMC Arizona plants to boost chip security

TSMC can count on American money.

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12:37 PM EDT, April 9, 2024

The United States Department of Commerce has decided to provide financial support for constructing TSMC microprocessor factories, earmarking $6.6 billion from the state budget for this initiative. The funding is aimed at the facilities currently under construction in Arizona.

The plans to allocate $6.6 billion towards the expansion of microprocessor manufacturing facilities, operated by the Taiwanese company TSMC in Arizona, have been officially announced by the United States Department of Commerce. This strategic move is targeted at making sure the most advanced microprocessors can be manufactured domestically, reducing exposure to potential geopolitical threats.

This significant financial injection will allow the American division of Taiwan Semiconductor Manufacturing Company (TSMC), which is in the process of constructing two manufacturing plants in Phoenix, to add a third facility to their project portfolio, as reported by the AP agency on Monday. According to details shared by US officials, production at the first plant is projected to commence by mid-2025.

Furthermore, in a bid to further support TSMC, the US Department of Commerce has offered the company low-interest government loans, totaling up to $5 billion, as Reuters reported.

USA Supports TSMC

Gina Raimondo, the head of the commerce department, highlighted in her statement the pivotal role that microprocessors play in today's technology landscape, describing them as the backbone upon which "all artificial intelligence is based." She further delineated the indispensability of these chips to the economy and their critical significance for defense and security purposes.

The investment in the Arizona facilities has been made feasible through the CHIPS and Science Act, passed two years ago, which lays out a plan to invest $280 billion in technological advancement. The US government is optimistic that these efforts will mitigate the risk of supply chain disruptions for microprocessors, similar to those experienced during the pandemic.

Raimondo has outlined an ambitious vision that by 2030, following the full operational capacity of the Arizona facilities, the USA will contribute to 20 percent of global production of the most advanced microprocessors. Currently, most of these critical components are manufactured in Taiwan, a region facing territorial disputes with China.

Beijing views Taiwan as an integral part of its territory and has not ruled out the use of force to assert control over the island. China's increased military maneuvers near Taiwan in recent years underscore the tensions.

Taiwan's leading role in microprocessor production has been dubbed the island's "silicon shield," a term that underscores the industry's strategic importance. However, there are concerns that increasing chip production outside of Taiwan could dilute this "shield."

In response, Taiwan has enacted its semiconductor legislation, offering attractive tax breaks for microprocessor research endeavors. According to Taipei's economic department, the establishment of Arizona plants will not diminish Taiwan's competitive edge, as the island will continue to host the production of cutting-edge components.