US government awards chip giant TSMC $11.6B in grants, loans

Posted on : 2024-04-09 17:15 KST Modified on : 2024-04-09 17:15 KST
There are reports that around US$6 billion in subsidies for Samsung Electronics will be announced in the near future
Taiwanese chip producer TSMC’s logo. (Reuters/Yonhap)
Taiwanese chip producer TSMC’s logo. (Reuters/Yonhap)

Reuters reported on Monday that the US will provide a subsidy of US$6.6 billion and US$5 billion in low-cost government loans to TSMC, the world's largest semiconductor foundry.

According to Reuters and the AP, the US Commerce Department is planning on supporting TSMC with up to US$11.6 billion. TSMC also agreed to expand its investments from US$40 billion to US$65 billion, and to add a third Arizona fab by 2030.

The US Commerce Department has called TSMC’s investment “the largest foreign direct investment in a greenfield project in US history.”

The US Commerce Department believes the grants will create 6,000 high-income direct manufacturing jobs in the US, as well as some 20,000 jobs in the construction sector.

TSMC is already building two factories that will cost US$40 billion in Phoenix, Arizona. The first factory, which is expected to begin producing chips in the first half of 2025, will have a 4-nanometer assembly line, while the second and third factories are projected to produce not only 3 nm chips but also the latest 2 nm process technologies.

The Commerce Department believes that TSMC’s second factory will begin production in 2028.

“These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin [not only] our economy, but frankly, a 21st century military and national security apparatus,” US Commerce Secretary Gina Raimondo was quoted as saying in a Reuters report.

“The department is expected to unveil an award for South Korea's Samsung Electronics as soon as next week,” Reuters reported, quoting anonymous sources.

According to an earlier report by Bloomberg News, Samsung Electronics will receive at least US$6 billion in subsidies.

The US government said on March 20 that it had reached a preliminary deal with Intel to provide as much as US$8.5 billion in subsidies and US$11 billion in loans.

The US Commerce Department and TSMC’s announcement of the subsidy and investment package came while US Treasury Secretary Janet Yellen was on a visit to China that included a meeting with Chinese Premier Li Qiang on Sunday.

“Senior administration officials were asked on the call with reporters if the Biden administration gave China a head’s up on the coming investment, given the delicate geopolitics surrounding Taiwan. The officials said only that their focus in making Monday’s announcement was solely on advancing US manufacturing,” the Associated Press said in a report.

US government subsidies for the semiconductor sector are authorized by the CHIPS and Science Act, which was passed in 2022 to support chipmakers that invest in the US. The key provision of the act is to pump US$52 billion into supporting semiconductor research and production inside the US.

By Jang Ye-ji, staff reporter

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