chipmakers race for chips act funds before trump era begins
Taipei, Friday, 3 January 2025.
With geopolitical tensions rising, TSMC and other major chipmakers have secured substantial funding under the US CHIPS Act. This move aligns with strategic expansions in the US as President-elect Donald Trump prepares to take office. Trump has criticized the CHIPS Act, labeling it a ‘bad’ deal and advocating for tariffs on imported chips. TSMC was awarded up to $6.6 billion for new fabrication sites in Phoenix, Arizona, while Intel secured $7.87 billion for investments in US facilities. The funding rush aims to finalize agreements before Trump’s administration potentially alters the landscape. Semiconductor investments are crucial for national security, as stated by US Secretary of State Antony Blinken. The CHIPS Act, signed by President Biden in 2022, allocated $52 billion in semiconductor subsidies as part of a $280 billion package. The industry’s future hangs in the balance as the transition of power approaches.
Manufacturing capacity expansion
TSMC’s $6.6 billion CHIPS Act funding will support a massive $65 billion investment in Phoenix, Arizona [1]. This expansion comes amid a broader industry push, with Intel securing $7.87 billion for nearly $90 billion in U.S. facilities investments [1]. The semiconductor manufacturing process requires stringent production environments, with advanced chips containing over 50 billion transistors on a fingernail-sized surface [2]. TSMC and Samsung currently dominate the advanced semiconductor market [2].
Political uncertainty impacts strategy
Chipmakers are rushing to finalize funding agreements before January 20, 2025, when President-elect Trump takes office [1]. Trump’s criticism of the CHIPS Act as a ‘bad deal’ and his advocacy for tariffs on imported chips has created uncertainty [1]. The Commerce Department responded by accelerating funding approvals in December 2024, including major awards to companies like Texas Instruments ($1.61 billion) and GlobalFoundries ($1.5 billion) [1].
Arizona’s semiconductor hub
Arizona has emerged as a crucial semiconductor manufacturing center, attracting over $102 billion in investments since 2020 [5]. The state has secured substantial commitments, including TSMC’s three fabs costing $65 billion and Intel’s two fabs at $32 billion [5]. U.S. Senator Mark Kelly emphasized the unprecedented scale: ‘We’re talking about an investment of private companies of $100 billion in our state. It’s the biggest investment any state has ever seen in any industry’ [5].
Market growth and AI demand
The global semiconductor market is projected to grow at a 15% CAGR from 2024 to 2032, driven significantly by AI technologies [2]. This growth comes as the industry faces various challenges, including supply chain risks from geopolitical tensions and natural disasters [2]. Secretary of State Antony Blinken emphasized that ‘U.S. investment in semiconductor manufacturing is crucial for our economic and national security’ [1].