A Taiwan Semiconductor Manufacturing Company (TSMC) logo is seen during the TSMC global RnD Center opening ceremony in Hsinchu on July 28, 2023. (Photo by Amber Wang/AFP)
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The U.S. Commerce Department said Friday it has ended a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Co’s U.S. unit to produce semiconductors in Phoenix, Arizona.
The binding contract—following a preliminary agreement announced in April—is the first major award to be completed under the $52.7 billion program set to begin in 2022.
President-elect Donald Trump, who criticized the program, is just weeks away from taking office.
in April, TSMC It agreed to expand the planned investment to $25 billion to $65 billion and to add a third Arizona factory by 2030.
The Taiwanese company will produce the world’s most advanced 2 nanometer technology in the second factory in Arizona, which will start production in 2028. TSMC also agreed to use the most advanced chip manufacturing technology called “A16” in Arizona.
“When we started this, there were a lot of naysayers who said maybe TSMC would make 5 or 6 nanometers in the United States,” Commerce Secretary Gina Raimondo said in an interview. “They’re actually making their most sophisticated chips in the United States.”
The TSMC award also includes $5 billion in low-cost government loans.
TSMC
Under the deal, TSMC will receive cash as it meets project milestones. The retailer expects to release at least $1 billion to TSMC by the end of the year, a senior official told reporters.
TSMC agreed to forgo share buybacks for five years – barring some exceptions – and share surplus profits with the US government “under an upward sharing agreement”.
TSMC CEO CC Wei said in a statement that the deal “helps us accelerate the development of the most advanced semiconductor manufacturing technology available in the US.”
Congress passed the Chips and Science Act in 2022 to boost domestic semiconductor output, which Raimondo said was essential to securing investment from TSMC and other chipmakers. Today, no cutting-edge chips are produced in the United States.
“It didn’t happen on its own … we had to convince TSMC that they wanted to expand,” Raimondo said, adding that officials had to convince American companies to buy US-made chips. “The market doesn’t put a price on national security.”
Commerce has allocated $36 billion for chip projects, including $6.4 billion Samsung In Texas, for 8.5 billion dollars Intel and for 6,100 billion dollars Micron Technology. Commerce is working to finalize those deals before Biden leaves office on January 20.
Reuters reported on Saturday that Commerce had ordered TSMC to halt shipments of advanced chips to Chinese customers.
Raimondo did not confirm that the department had issued a directive to TSMC, but said the United States should play offensive and defensive with China.
“Investing in TSMC to expand here is an insult; the defense is making sure that neither TSMC nor any other company is selling our most sophisticated technology to China and violating our export controls,” Raimondo said, adding that he was not saying TSMC had committed any violations.
“We take national security seriously and look into all potential issues, whether with companies we support or not,” he added.
