TSMC Secures $5B in Grants from US Government to Establish Chip Facility

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Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, is reportedly in line to receive more than $5 billion in federal grants from the U.S. government to establish a chip manufacturing plant in Arizona. While the award has yet to be finalized, it remains uncertain whether TSMC will utilize the loans and guarantees also provided by the 2022 Chips and Science Act, according to sources familiar with the matter.

TSMC has committed to investing around $40 billion in its Arizona plant, marking one of the largest foreign investments in U.S. history. The U.S. government, through the CHIPS Act, aims to bolster domestic semiconductor production, offering $52.7 billion in funding, including $39 billion in subsidies for semiconductor production and $11 billion for research and development.

The Biden administration recently announced a $1.5 billion award to contract chip manufacturer GlobalFoundries under the CHIPS Act. U.S. Commerce Secretary Gina Raimondo had indicated in February that the department intended to make several funding awards within two months.

TSMC's advanced manufacturing processes are integral to producing Nvidia's leading artificial intelligence chips. The company noted in January that the demand for advanced packaging was exceptionally strong, with capacity constraints expected to persist into the next year, particularly for supporting the production of complex AI chips.