TSMC Arizona to receive $6.6 billion funding under CHIPS for three semiconductor fabs

The United States Department of Commerce and TSMC Arizona have signed a non-binding preliminary memorandum of terms (PMT) for direct funding under the CHIPS and Science Act, Commerce

The United States Department of Commerce and TSMC Arizona is a subsidiary of the Taiwan Semiconductor Manufacturing Company Limited (TSMC). The $6.6 billion in direct funding would support TSMC’s investment of more than $65 billion in three greenfield fabs in Phoenix, Arizona.

The company’s first fab will produce 4 nanometer (nm) FinFET process technologies.

TSMC announced on Monday that it will use the funding to produce 2 nm nanosheet process technology at its second fab in addition to the previously announced plans to produce 3 nm process technologies.

TSMC Arizona also committed to building a third fab before the end of the decade that will produce 2nm or more advanced process technologies depending on customer demand.

“TSMC Arizona’s first fab is on track to begin production leveraging 4nm technology in first half of 2025. The second fab will produce the world’s most advanced 2nm process technology with next-generation nanosheet transistors in addition to the previously announced 3nm technology, with production beginning in 2028,” according to a separate announcement by TSMC.

The chips manufactured by TSMC Arizona will be used in artificial intelligence, high-performance computing, 5G/6G communications and autonomous vehicles.

“We are honored to support our customers who have been pioneers in mobile, artificial intelligence and high-performance computing, whether in chip design, hardware systems or software, algorithms, and large language models,” TSMC chief executive officer Dr C C Wei.

“Through its Arizona fabs, TSMC will be able to better support its key customers, including US companies AMD, Apple, Nvidia and Qualcomm, among others, by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era,” according to the press release.

A shortage of computer ships caused several automakers to cut production in 2021, including Ford, GM, Volkswagen, Toyota, Nissan, Daimler and Renault. 

Under the PMT, TSMC will have access to approximately $5 billion in proposed loans under the CHIPS and Science Act.

The company has also indicated that it is planning to claim the US Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.

Fourteen direct suppliers to TSMC also “plan to construct or expand plants in Arizona or other parts of the US, further strengthening US domestic supply chain resilience,” according to the announcement.

Antimony, arsenic, boron, carbon, germanium, selenium, silicon, sulfur and tellurium are used in most chips, with silicon forming the basis for most integrated chips.

The premium for silicon in the US has been increasing in 2024.

Fastmarkets last assessed silicon, ddp US at $1.55-1.7 per lb on April 4, up by 20.37% from $1.30-1.40 per lb on January 4. 

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