6.6 billion dollar boost for TSMC's Arizona chip plants
Phoenix, Monday, 20 January 2025.
TSMC, a leading semiconductor manufacturer, has received a remarkable $6.6 billion commitment from the U.S. government under the CHIPS and Science Act. This influx of funding will drive the expansion of TSMC’s manufacturing plants in Arizona. The strategic investment, part of a larger $65 billion plan, is set to place these facilities at the forefront of advanced chip production. TSMC’s CFO Wendell Huang has expressed confidence that funding will continue smoothly even with Donald Trump taking office. In 2024, the first plant commenced production, with a second poised to be operational by 2028. The company reported record profits recently, largely due to a surge in AI chip demand, boosting their stock by nearly 4%. Despite Trump’s previous criticisms of the CHIPS Act, experts predict continuity due to bipartisan support. This move underscores TSMC’s commitment to the U.S. semiconductor industry, reflecting its strong ties with the American government.
Initial funding milestone achieved
TSMC has already secured the first portion of government support, receiving $1.5 billion in Q4 2024 [1]. This initial funding is part of the broader $6.6 billion commitment under the CHIPS Act, supporting the construction of three cutting-edge chip fabrication plants in Arizona [1]. The company’s total investment in Arizona exceeds $65 billion [1], marking a significant expansion of U.S. semiconductor manufacturing capabilities.
Production timeline and AI demand
The first Arizona fabrication plant began operations on November 7, 2024 [1]. TSMC’s chairman C.C. Wei projects a remarkable 20% compound annual growth rate in revenue over the next five years, driven by AI-related demand [5]. The second plant is scheduled to start production in 2028 [1], while the company expects approximately 25% revenue growth in U.S. dollars for 2025 [5].
Political transition and funding stability
Despite the upcoming political transition, TSMC maintains a positive outlook. The CHIPS Act, which pledged nearly $53 billion for domestic semiconductor development, enjoys bipartisan support [1]. Industry experts believe the Trump administration will likely maintain the CHIPS Act policy [1]. TSMC’s CEO emphasized their ‘long-standing and good relationship’ with U.S. authorities at federal, state, and city levels [1].
Broader semiconductor industry developments
The U.S. Department of Commerce recently committed an additional $1.4 billion to the CHIPS Program’s advanced packaging initiative [5]. This development occurs amid China’s launch of an investigation into U.S. chip grants and potential dumping practices by American chipmakers [5]. The automotive chip sector remains stagnant, though TSMC’s operations remain unaffected by this slowdown [5].