The US Department of Commerce has announced a preliminary agreement with Taiwan Semiconductor Manufacturing Company (TSMC) to support the construction of US semiconductor manufacturing facilities.
Under a preliminary memorandum of terms (PMT) involving $6.6 billion CHIPS Act direct funding, TSMC will build a third chip factory in Phoenix, increasing its total investment in Arizona to $65 billion.
The third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade.
President Joe Biden said the facilities will manufacture the most advanced chips in the world, putting the US on track to produce 20% of the world’s leading-edge semiconductors by 2030.
He said the agreement also dedicates $50 million of CHIPS funding to training and developing the local workforce.
“America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to just over 10%, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities,” the President said.
Dr. Mark Liu, TSMC Chairman, said its US operations allow it to better support domestic customers, and trailblaze future advancements in semiconductor technology.
The PMT also proposes to provide TSMC with up to $5 billion in loans and the company plans to apply for US Treasury Department Investment Tax Credits of up to 25% of the qualified capital expenditure at TSMC Arizona.
The stakes in the global semiconductor market are being raised significantly.
India recently announced it will develop three major semiconductor units as it ramps up its electronics industry and seeks to create ‘technological self reliance’ (click here).
By 2030, the global semiconductor industry is expected to grow to $1 trillion and Indian semiconductor demand is expected to cross $110 billion.
