TSMC gets $6.6 billion in cash and $5 billion in loans from CHIPS Act, plans third US fab

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The largest CHIPS and Science Act support package to date.

TSMC
(Image credit: TSMC)

The U.S. government has announced plans to provide TSMC financial support totaling $11.6 billion, comprising $6.6 billion in grants and up to $5 billion in loans. TSMC will use the funding to build three semiconductor production facilities in Arizona, with a total investment exceeding $65 billion. This is the largest financial package the U.S. government approved under the CHIPS and Science Act.

TSMC will build the third fab module near its Fab 21 phase 1, which should start the production of chips using 4nm and 5nm-class process technologies in the first half of 2025. Fab 21 phase 2 is scheduled to begin operations in 2028, making chips on 2nm and 3nm process technologies. The third plant will likely use an even more advanced fabrication process (TSMC says to expect something at 2nm and sub-2nm), though it is unknown when it will start producing chips. 

TSMC's investment should have a significant economic impact, creating 6,000 high-tech manufacturing jobs and over 20,000 construction jobs. The project also includes a $50 million allocation for training local workers. Arizona is expected to benefit significantly from this investment, with the semiconductor industry's expansion being a central element of President Joe Biden's economic agenda.

TSMC's projects in Arizona have faced challenges, including delays due to labor disputes and uncertainties regarding government support. The second facility's production timeline has been pushed back from 2026 to 2028. Additionally, Bloomberg reports that at least one TSMC supplier has abandoned its planned Arizona project, citing workforce difficulties. 

Financially, TSMC plans to apply for U.S. Treasury Department Investment Tax Credits of up to 25% of the qualified capital expenditure at TSMC Arizona. Meanwhile, the payout of the promised funds to TSMC is subject to a due diligence period, followed by the fulfillment of construction and production benchmarks. The final agreement between TSMC and the U.S. government is still pending, and the funds may be subject to return provisions if TSMC fails to meet its commitments on time.

The financial support package for TSMC is part of President Joe Biden's push to revitalize the U.S. semiconductor industry under the 2022 CHIPS and Science Act. This legislation allocates $39 billion in direct grants, alongside $75 billion in loans and guarantees, to encourage semiconductor companies to establish manufacturing operations in the U.S. This move aims to reverse the trend of outsourcing production overseas and strengthen the country's technological independence.

Anton Shilov
Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

11 Comments Comment from the forums
  • oofdragon
    Guys.. legit question here. When the government says "10M to build this small bridge" everyone knows a lot of that money goes to someones pocket instead od funding the bridge, like, a lot. Now, yes I don't know anything about how much does it cost to build a fab, but, isn't 1B a LOT of money? You know , one thousand times 1M, and Im pretty sure 1M can build like almost anything? So.. 65B? Rally? 6B gift? I mean
    Reply
  • oofdragon
    And another legit question... here in my country UBER is making a lot of money with rides. But, UBER is a USA company right? Why don't my government country simply start its own riding app and get ride of Uber?? And I'm asking this because, why does the USA government NEED tsmc?? Rlly, does it? I think tsmc is USA funded from beginning no matter what you tell me, but even looking at it as a foreign chip maker how does it make sense that the great USA needs a foreigner tech? It's USA bro, they got the aliens tech (and spy agencies)
    Reply
  • Dustyboy1492
    oofdragon said:
    Guys.. legit question here. When the government says "10M to build this small bridge" everyone knows a lot of that money goes to someones pocket instead od funding the bridge, like, a lot. Now, yes I don't know anything about how much does it cost to build a fab, but, isn't 1B a LOT of money? You know , one thousand times 1M, and Im pretty sure 1M can build like almost anything? So.. 65B? Rally? 6B gift? I mean
    Nobody is pocketing the money. Taiwan is at real risk of being invaded/blockaded by the PRC. Rebuilding the semiconductor manufacturing base in the US is a national security issue.
    Reply
  • jkflipflop98
    oofdragon said:
    Guys.. legit question here. When the government says "10M to build this small bridge" everyone knows a lot of that money goes to someones pocket instead od funding the bridge, like, a lot. Now, yes I don't know anything about how much does it cost to build a fab, but, isn't 1B a LOT of money? You know , one thousand times 1M, and Im pretty sure 1M can build like almost anything? So.. 65B? Rally? 6B gift? I mean

    It takes around $30B to build a leading-edge fab from scratch. That's why there's only 3 players in the game. The barrier to entry is extremely expensive. A new company starting up and building it's own facility is going to be pretty much impossible.
    Reply
  • The_Future_Is_Here
    oofdragon said:
    And another legit question... here in my country UBER is making a lot of money with rides. But, UBER is a USA company right? Why don't my government country simply start its own riding app and get ride of Uber?? And I'm asking this because, why does the USA government NEED tsmc?? Rlly, does it? I think tsmc is USA funded from beginning no matter what you tell me, but even looking at it as a foreign chip maker how does it make sense that the great USA needs a foreigner tech? It's USA bro, they got the aliens tech (and spy agencies)
    "How does it make sense that the great USA needs a foreigner tech?"

    Well, I hate to break it too you but much of the world's greatest modern innovations do not solely revolve around people born within the USA.
    Without people traversing the globe a lot of knowledge found in the 19th, 20th, & 21st Centuries would be limited to just a select number of Western Nations for the most part.


    Their is a HUGE global reliance on a very minimal number of semiconductor manufacturers, and the largest of those is TSMC, and due to CURRENT geopolitical divisions their is a great concern that the Peoples Republic of China may attempt to invade or at the very least blockade Taiwan, and in doing so attempt to stop any exports of any products out of Taiwan to the rest of the world which would include computer chips produced within semiconductor facilities owned by TSMC.


    Additionally it's possible that if Taiwan did get blocked off from the rest of the world then all of that additional knowledge found within the organisation would also end up being restricted to just China, providing a unstable balance in terms of semiconductor and micro processor accessibility reliability which is of HUGE concern to both the general public in the rest of the world (especially the USA) and the US Military who have advanced modern equipment which in some small way relies on a wider network of everyday essential things like cars, trucks, microwaves, etc that all utilize chips manufactured by TSMC in Taiwan currently.

    The CHIPS act is the USA trying do diversify the manufacturing & expertise of these semiconductor manufacturers and ensuring that if anything was to happen between the PRC & Taiwan then the USA would not be out into dire circumstances with no possible short term solution outside of defending Taiwan against the PRC, a conflict that NOBODY wants to happen.

    Also, other technology that the USA got from foreigners was essentially what became NASA, and indirectly the Manhattan Project, or the Jet Engine, and their are numerous other examples of the USA being heavily reliant on technology developed abroad, you only need to look around the average American Town or City to see that.
    Reply
  • vern72
    I'm surprised that these types of factories are being set up in Arizona. Don't they need a lot of water?
    Reply
  • umeng2002_2
    vern72 said:
    I'm surprised that these types of factories are being set up in Arizona. Don't they need a lot of water?

    Maybe not for EUV processes?
    Reply
  • DavidMV
    vern72 said:
    I'm surprised that these types of factories are being set up in Arizona. Don't they need a lot of water?
    Intel paved the way in Arizona with all of their large fabs there. They recycle most of the water. TSMC is going to do the same.
    Reply
  • KyaraM
    oofdragon said:
    And another legit question... here in my country UBER is making a lot of money with rides. But, UBER is a USA company right? Why don't my government country simply start its own riding app and get ride of Uber?? And I'm asking this because, why does the USA government NEED tsmc?? Rlly, does it? I think tsmc is USA funded from beginning no matter what you tell me, but even looking at it as a foreign chip maker how does it make sense that the great USA needs a foreigner tech? It's USA bro, they got the aliens tech (and spy agencies)
    Because the US isn't the center of the universe, or the only developed country in the world, and other places have great and highly advanced tech, too. Fun fact, a lot of the equipment for these chip making processes comes from Europe; nuclear fusion reactors are currently researched around the world as well, which should give you a clue about what countries are on a certain, comparable tech level. Lastly, as others pointed out, there aren't many players in this market and establishing a new one is nearly impossible because it is so expensive with lots of expensive machinery needed. Not everything can be built for 1 mil, a lot of stuff is actually a lot more expensive nowadays.

    Besides all that, we live in a globalized world, where a single country does not hold all the cards in its hand and exchange is essentially required, thank goodness. And please, keep out the tinfoil hat theories about alien tech...
    Reply
  • umeng2002_2
    ASML made itself party to certain US sanctions as part of the condition of their acquisition of certain US lithography technology. The US government allowed the export of that technology on the condition that they had that sanction power. The US wasn't totally dumb enough to let any foreign company come in willy Billy and buy up US tech.

    Other than Arm, most of chip designers are American companies. Ask those other countries why they aren't designing competing chips. Why doesn't the EU have internet companies like the US? It all gets bogged down in regulations and tax policy.
    Reply