US Bolsters Chip Production With TSMC's Third Arizona Factory Deal

he Taiwan chip giant TSMC has agreed to build a third semiconductor factory in Arizona, raising its total investment in the United States to $65 billion, US officials said Monday. Lael Brainard, President Joe Biden’s chief economic adviser, hailed the election-year news as “a new chapter for America’s semiconductor industry.”

She told reporters the investment planned by TSMC is based on a preliminary agreement with the US Commerce Department that is tied to a major investment law called the Chips and Science Act. Under this agreement, Taiwan Semiconductor Manufacturing Company will receive up to $6.6 billion in direct funding from the US government and could get up to another $5 billion in the form of loans. The law is a pillar of the administration’s drive to protect and strengthen American industrial power as Biden runs for another term in November.

The United States is seeking to ward off the prospect of suffering shortages of cutting edge chips that are essential for making cell phones, electric cars and advanced military equipment. As things stand now the United States is highly dependent on Asia for these components and thus vulnerable in the event of a geopolitical crisis, particularly in a sensitive place such as Taiwan, which China regards as a renegade province it is determined to take back some day.

TSMC, which had already planned to build two plants in Arizona, is going to make semiconductors even more advanced than originally planned at one of them and will also construct a third facility, US officials said early Monday. The company is thus raising its total investment in the US from $40 billion to $65 billion. “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,” Commerce Secretary Gina Raimondo said. “These are the chips that underpin all artificial intelligence.”