The administration of US President Joe Biden finalized its CHIPS Act incentive awards for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), marking a major milestone for a program meant to bring semiconductor production back to US soil.
TSMC would get US$6.6 billion in grants as part of the contract, the US Department of Commerce said in a statement yesterday. Though the amount was disclosed earlier this year as part of a preliminary agreement, the deal is now legally binding — making it the first major CHIPS Act award to reach this stage.
The chipmaker, which is also taking up to US$5 billion in loans, would get at least US$1 billion of the total this year, because it has already achieved some of the benchmarks required, officials said.
Photo: Caitlin O’Haram, Bloomberg
Finalizing the agreement with TSMC guarantees that cutting-edge semiconductor manufacturing would return to the US, bringing essential capabilities onshore, US Secretary of Commerce Gina Raimondo said in a briefing.
“This is some of the most sought-after technology on the planet,” she said. “It’s impossible to overestimate how significant this is for America’s national and economic security.”
More deals would be completed in the coming weeks, solidifying one of the country’s biggest pieces of industrial policy in decades and a signature piece of legislation for the outgoing Biden administration.
The CHIPS and Science Act set aside US$39 billion in grants, US$75 billion in loans and loan guarantees, and 25 percent tax credits — all to lure semiconductor manufacturing to the US after decades of production shifting to Asia. The vast majority of the funds have been allocated, but only a portion of those awards are set in stone, including one small grant announced in September.
In TSMC’s case, the money would help underwrite more than US$65 billion of spending to build a three-factory complex north of Phoenix, Arizona. More funds would be released when the company hits additional targets. The project is the largest-ever foreign direct investment by a company in a new site, the Commerce Department said.
Officials are under increasing pressure to wrap up talks and get money out the door. Business groups in four states with projects in line for CHIPS Act funding — Ohio, New Mexico, Oregon and New York — pushed for the immediate release of that money in a recent letter to Biden, the Columbus Dispatch reported.
Three of those states have projects by Intel Corp, and that company’s chief executive officer has expressed his frustration with the process. Intel is facing serious business challenges that have complicated its CHIPS Act negotiations. The chipmaker is still working through substantive terms of its contract, including what happens if the company spins off its manufacturing business or is acquired in part or in whole.
US president-elect Donald Trump’s return to the White House in January has added urgency to the effort.
There is little fear among companies that the CHIPS Act would go away, but firms like Intel, Samsung Electronics Co and Micron Technology Inc are eager to avoid the possibility of having to renegotiate terms with a new administration.
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