TSMC Secures $6.6B In CHIPS Act Funding Ahead Of Trump Inauguration

The U.S. Department of Commerce announced today that it has awarded $6.6 billion in government subsidy to TSMC for its Phoenix, Arizona production endeavors. This contract is the first major award to be confirmed under the CHIPS Incentives Program’s Funding Opportunity for Commercial Fabrication Facilities (mouthful of a name) initiative created in 2022. This award also comes merely weeks before President-elect Donald Trump takes office, who has, in the past, been openly opposed to the program.

Today, TSMC was awarded a $6.6 billion subsidy by the Department of Commerce as part of its initiative to expand production in Arizona, as well as to begin manufacturing 2-nanometer semiconductors by 2028. In April, TSMC had agreed to increase its planned investment to $65 billion and add a third fabrication facility by 2030, so this binding contract with Commerce ought to help the U.S. have a technological and supply edge (although not necessarily in prices) in the foreseeable future.

Gina Raimondo, Secretary for Commerce, said that "when we started this there were a lot of naysayers who said maybe TSMC will do 5 or 6 nanometer in the United States," but now TSMC is "doing their most sophisticated chips in the United States." 

TSMC's CEO, Wei C.C. shared similar thoughts, saying that the deal "helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S."

Under the agreement and terms, the award includes an up to a $5 billion low-cost government loan. TSMC will only receive payouts when it meet project milestones. TSMC also agrees to forgo stock buybacks for five years and share excess profits with the U.S. government. There also seems to a exclusivity deal at play as well because on Saturday Commerce had apparently ordered TSMC to halt shipments of advanced chips to Chinese customers. 

Raimondo's only remark about that is that the U.S. needs to play offense and defense with China. Raimondo said, "Investing in TSMC to expand here is offense - defense is making sure that neither TSMC nor any other company sells our most sophisticated technology to China and violates our export controls."

Commerce is currently hard at work trying to close deals with other semiconductor projects, especially before Biden leaves office. A few examples are the $6.4 billion contract with Samsung, $6.1 billion with Micron Technology, and $8.5 billion with Intel.