US economy

TSMC to make state-of-the-art chips in US after multibillion subsidy pledge

Taiwan Semiconductor Manufacturing Company is to build its most advanced chips in Arizona after receiving a pledge of as much as $11.6bn in US government subsidy as part of Joe Biden’s efforts to attract computer chip production.

TSMC, the world’s most valuable chipmaker, says it aims to start producing the two-nanometre chips at a new factory in Phoenix, Arizona, by 2028.

It already has two factories under construction in Arizona but will build a third under the latest deal with the US government. The Taiwanese company will receive up to $6.6bn (£5.2bn) in direct funding from the US government and could get up to another $5bn in the form of loans.

The funding is tied to the 2022 Chips Act, a flagship policy of the US president to try to re-establish chip manufacturing in the country after decades of migration to Asia. The US manufacturer Intel received a promise of support worth almost $20bn in grants and loans to support its efforts to reinvent itself as a US chipmaking champion. It is to build sites in Arizona, Ohio, New Mexico and Oregon.

Lael Brainard, Biden’s chief economic adviser, hailed the election year news as “a new chapter for America’s semiconductor industry”.

Chip fabrication plants, known as fabs, are highly valued by governments because of advanced semiconductor production to the global economy as well as military applications. TSMC has become one of the key players in the chip industry, running the fabs that make the most advanced computer chips on behalf of other “fabless” companies that focus on design.

Chips with transistors measuring only three nanometres across are used in Apple’s latest iPhone. Nvidia uses TSMC for some of the highly coveted chips used for training artificial intelligence systems. For comparison, a single coronavirus particle measures between about 45nm and 110nm across.

The US commerce secretary, Gina Raimondo, said: “For the first time ever, we will be making at scale the most advanced semiconductor chips on the planet here in the United States of America. These are the chips that underpin all artificial intelligence.”

The fabless model allows many more companies to access advanced manufacturing facilities without investing billions of dollars to build cleanrooms and buy advanced lithography machines, which use extreme ultraviolet light to etch transistors on an almost impossibly small scale.

However, TSMC’s dominance has meant that large parts of the world economy are reliant on products from Taiwan, which is claimed to be a renegade province by China. The Biden administration has been keen to diversify the supply of the most advanced chips to prevent it being cut off if China were to invade.

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Mark Liu, TSMC’s chair, said: “Our US operations allow us to better support our US customers.”

Raimondo said the new TSMC investment would create at least 6,000 direct hi-tech jobs but also more than 20,000 in the construction of the factories and tens of thousands of indirect jobs. That promises benefits to the economy in Arizona, which is expected to be a key swing state once again in this year’s presidential election.


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