The global semiconductor supply chain, the United States announced on Friday (Nov 15) that Taiwanese chip manufacturing giant Taiwan Semiconductor Manufacturing Company (TSMC) will receive up to $6.6 billion in direct funding to construct three state-of-the-art chip plants in Arizona.
This investment, part of the broader CHIPS and Science Act passed under the Biden administration, marks a major milestone in U.S. efforts to bolster domestic chip production and reduce dependency on Asian suppliers.
The announcement came as President Joe Biden highlighted the strategic importance of the deal and its potential to spur significant economic and technological advancements.
“Today’s final agreement with TSMC—the world’s leading manufacturer of advanced semiconductors—will spur $65 billion of private investment to build three state-of-the-art facilities in Arizona,” Biden said in a statement.
The timing of the announcement is noteworthy, occurring just before President-elect Donald Trump takes office. Trump’s administration has expressed skepticism toward the CHIPS Act, questioning its approach to addressing supply chain vulnerabilities and its focus on large-scale subsidies. Despite these criticisms, the Biden administration has pushed ahead with the program, emphasizing its importance for national security and technological leadership.
Commerce Secretary Gina Raimondo underscored the critical nature of the initiative, saying,
“Currently, the United States does not make on our shores any leading-edge chips, and this is the first time ever that we’ll be able to say we will be making these leading-edge chips in the United States.”
These chips, she noted, are essential for powering artificial intelligence, quantum computing, 5G/6G networks, and sophisticated military equipment.
The United States once dominated global semiconductor production, manufacturing nearly 40% of the world’s chips in the 1990s. However, that share has dwindled to less than 10% today, with no domestic production of the most advanced chips. The decline has left the U.S. heavily reliant on Taiwan, South Korea, and China for critical components.
The Biden administration’s push to revitalize the sector includes $36 billion in grants, part of the broader $52 billion package authorized by the CHIPS Act. While much of the funding remains in the due diligence phase, TSMC is only the second company, after Polar Semiconductor, to finalize an agreement and begin receiving funds.
A senior U.S. official, speaking anonymously, revealed that $1 billion of the $6.6 billion allocated to TSMC is expected to be disbursed this year, with additional support coming in the form of up to $5 billion in loans.
TSMC’s investment in Arizona is transformative. The first of the three planned facilities is expected to open by early 2025, with all three operational by the late 2020s. At full capacity, these plants will collectively manufacture tens of millions of advanced logic chips, supporting a wide range of applications:
- 5G and 6G smartphones
- Autonomous vehicles
- High-performance computing
- Artificial intelligence systems
The U.S. Department of Commerce highlighted that early production yields at the Arizona plant are already comparable to similar facilities in Taiwan, signaling a smooth transition of expertise and technology.
The investment is also projected to create around 6,000 direct manufacturing jobs, with thousands more in indirect employment through construction, supply chain support, and related industries.
The decision to support TSMC is rooted not only in economic considerations but also in national security concerns. Advanced semiconductors are a critical component of modern military technology, including next-generation weapons systems, secure communications, and artificial intelligence applications.
By establishing domestic production of leading-edge chips, the U.S. aims to mitigate the risks associated with supply chain disruptions, particularly in light of escalating tensions with China over Taiwan’s sovereignty.
“This investment addresses a significant national security liability,” Raimondo said, emphasizing that U.S. reliance on foreign chipmakers has left critical industries vulnerable to geopolitical instability.
Incoming President-elect Donald Trump has voiced opposition to the CHIPS Act, criticizing its reliance on subsidies to foreign companies. Trump argues that the U.S. should prioritize developing homegrown companies rather than depending on foreign giants like TSMC.
“This approach will keep the U.S. playing catch-up instead of leading,” Trump said during a recent rally, calling for more support to domestic players such as Intel and Qualcomm.
Despite the criticism, bipartisan support for semiconductor investments remains strong, reflecting a broad consensus on the need to strengthen U.S. technological capabilities.
The TSMC deal is poised to have ripple effects across the global semiconductor industry. Taiwan remains the world’s leader in chip manufacturing, with TSMC accounting for over 50% of the global market for advanced semiconductors. By building facilities in the U.S., TSMC diversifies its production footprint, reducing its exposure to geopolitical risks while aligning with U.S. strategic objectives.
The move is also expected to intensify competition among chipmakers, particularly as South Korea’s Samsung and U.S.-based Intel ramp up their own investments in advanced chip manufacturing.
The anticipated $65 billion in private investment accompanying TSMC’s U.S. expansion underscores the economic opportunities tied to the initiative. In addition to creating high-paying jobs, the project will likely foster innovation hubs in Arizona, attracting talent and capital to the region.
Moreover, the increased availability of advanced chips could accelerate innovation in industries like:
- Healthcare technology, enabling breakthroughs in diagnostics and treatments.
- Renewable energy systems, optimizing power grids and storage solutions.
- Automotive technology, advancing safety and autonomy in vehicles.
While the Biden administration celebrates the TSMC deal as a victory for U.S. competitiveness, challenges remain. The semiconductor supply chain is highly complex, requiring seamless collaboration across engineering, manufacturing, and logistics. Ensuring that the Arizona plants operate efficiently and at scale will test U.S. infrastructure and workforce readiness.
Furthermore, Trump’s administration will inherit the early stages of implementation, potentially shaping the trajectory of the CHIPS Act under new leadership. Balancing long-term strategic goals with immediate political pressures will be key to maintaining momentum.
The $6.6 billion investment in TSMC represents a landmark moment in U.S. efforts to reclaim technological leadership in the semiconductor industry. As the world’s leading chipmaker establishes a foothold in Arizona, the U.S. is set to gain not only cutting-edge technology but also a critical safeguard against future supply chain disruptions.
