Over $5 Billion in Grants for a US Semiconductor Facility will go to TSMC, According to Sources

The largest contract chipmaker in the world, Taiwan Semiconductor Manufacturing Co. (TSMC) (2330.TW), opens new tab, is expected to get over $5 billion in federal funds from the US government in exchange for establishing a chip manufacturing facility in Arizona.

According to the source, which cited people familiar with the situation, the award has not yet been finalized, and it is unknown whether TSMC will take advantage of the loans and guarantees also provided by the 2022 Chips and Science Act.

Requests for comment from Reuters were not immediately answered by TSMC or the US Commerce Department.

The company that produces chips for Apple’s (AAPL.O) new-generation iPhones, TSMC, has announced that it will invest over $40 billion in its Arizona facility, making it one of the biggest foreign investments in American history.

Through the U.S. CHIPS Act, which was passed in 2022 and offers $52.7 billion in financing, including $39 billion in subsidies for semiconductor manufacture and $11 billion for research and development, the U.S. has been fighting to grow domestic semiconductor production.

The Biden administration said last month that GlobalFoundries (GFS.O), a contract chip manufacturer, will receive a $1.5 billion award under the Act.

Gina Raimondo, the secretary of commerce for the United States, stated in February that the agency intends to award multiple grants in less than two months.

The industry-leading artificial intelligence chips from Nvidia (NVDA.O) are made using TSMC’s state-of-the-art manufacturing techniques.
The Taiwanese chip manufacturer had stated in January that it was unable to meet the high demand for sophisticated packaging and that this situation would persist into the following year. One of the main obstacles to the scaling up of the supply of complicated AI chips has been the lagging capacity for advanced packaging.