TSMC gets $11.6B in US grants and loans; will open 3rd Arizona chip plant

Apple chipmaker TSMC has announced plans to open a third Arizona chip plant, in addition to the two already under construction. This will be the most advanced of the three plants, making 2nm chips.

The expansion plan appears to have been part of a deal for the company to receive a total of $11.6B in US grants and loans …

Backgrounder on TSMC’s Arizona chip plants

TSMC’s announcement that it was building a chip fabrication plant in Arizona was hailed as a major success for the US CHIPS Act – intended to free the US from dependence on China for advanced chip supplies, and to generate jobs for US workers. Apple proudly announced that it would be buying American-made chips for some of its devices.

The gloss soon began to wear off, however. The first plant will only be able to make larger process chips, only suitable for older Apple devices, and it wasn’t long before TSMC demanded bigger subsidies and fewer rules.

The project fell behind schedule, and over budget, with production already pushed into 2025, from 2024. There is talk of US-made chips costing more than those made in Taiwan, which could mean Apple would buy fewer of them than originally expected.

There were claims that the first plant would be a paperweight, as output would need to be sent back to Taiwan for what’s known as the ‘packaging’ process of encapsulating different circuit boards into a single chip. However, Apple later announced that it would commission another US-based facility to package the chips.

TSMC gets $11.6B from US; 3rd Arizona chip plant

The US government had originally asked TSMC to open up to six chip plants in Arizona, and while this had always seemed optimistic, Bloomberg reports that a third plant has been agreed. This one is slated to make 2nm chips – significantly more advanced than the other plants.

This appears to be have been a condition for the company to receive a mix of multi-billion dollar grants and loans.

The US plans to award Taiwan Semiconductor Manufacturing Co. $6.6 billion in grants and as much as $5 billion in loans to help the world’s top chipmaker build factories in Arizona, expanding President Joe Biden’s effort to boost domestic production of critical technology.

Under the preliminary agreement announced by the US on Monday, TSMC will construct a third factory in Phoenix, adding to two facilities in the state that are expected to begin production in 2025 and 2028.

While those are huge sums of money, the hope is that it will provide good value for the US economy – the $5B being repaid, leaving a net investment of $6.6B in return for TSMC pumping almost nine times as much money into the venture.

In total, the package will support more than $65 billion in investments at the three plants by TSMC, the go-to chipmaker for companies such as Apple and Nvidia.

Photo by Mason Field on Unsplash