tsmc secures $6.6 billion from chips act amidst political uncertainty
Hsinchu, Thursday, 9 January 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) has secured $6.6 billion in funding from the CHIPS Act, a move set to bolster its investment in U.S. manufacturing. This funding aims to enhance TSMC’s competitive edge in the semiconductor market. The company’s U.S. expansion plans include a $10 billion investment to boost production. However, the funding comes amid potential policy changes as Donald Trump prepares to take office. Trump’s expressed discontent with the CHIPS Act could threaten its stability, posing risks to TSMC’s operations. Despite a strong stock performance over the past year, with shares increasing by over 100%, TSMC faces uncertainty. The incoming administration’s stance may impact the company’s future U.S. investments and expansion plans. TSMC’s commitment to broadening its manufacturing capabilities in the U.S. continues, though challenges remain.
Manufacturing expansion plans
TSMC’s ambitious expansion in Arizona encompasses three manufacturing facilities (Fab21 P1/P2/P3), with a total planned investment of $65 billion [5]. The first facility is set to begin mass production by the end of Q1 2025, targeting a capacity of 30,000 wafers monthly by Q2 2025 [5]. The company plans to employ approximately 1,800 workers at Fab21 P1, with projections indicating a workforce of around 6,000 employees for the complete expansion [5].
Financial support and cost considerations
Beyond the initial $6.6 billion CHIPS Act funding [1], TSMC has secured an additional $5 billion in low-interest loans [5]. The subsidies have significantly improved the economics of U.S. production, reducing per-wafer costs from $12,272 to $10,438 [5]. However, President-elect Trump has criticized the CHIPS Act, stating ‘That chip deal is so bad, we put up billions of dollars for rich companies’ [1], creating uncertainty about future support.
Technology deployment strategy
TSMC’s U.S. operations will maintain a strategic technology gap with its Taiwan headquarters [5]. The Arizona facilities will focus on producing chips using 5nm, 4nm, and 3nm technologies [1]. Fab21 P2 is under construction with trial production scheduled for late 2026, while Fab21 P3 aims to begin land acquisition in 2025 [5]. This phased approach allows TSMC to maintain its technological edge while expanding its global manufacturing footprint [GPT].