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TSMC to receive $6.6 billion to boost US chip manufacturing| GuyWhoKnowsThings

The Biden administration will provide up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the leading maker of the most advanced microchips, in a bid to bring some of the most advanced semiconductor technologies to the United States.

The funds, which come from the bipartisan CHIPS and Science Act, will help support construction of TSMC's first major U.S. center in Phoenix. The company has already committed to building two plants at the site and will use some of the grant money to build a third factory in Phoenix, U.S. officials said Sunday. TSMC will also increase its total investments in the United States to more than $65 billion, up from $40 billion.

Bringing the world's most sophisticated chip manufacturing to the United States has been a major goal for the Biden administration. TSMC announced that it would now produce two-nanometer core chips, a significant step forward given that the United States does not currently produce any of the most advanced semiconductors.

Federal officials see the investment as vital to building a reliable domestic supply of semiconductors, the small chips that power everything from phones and supercomputers to cars and fighter jets. Although semiconductors were invented in the United States, production has largely moved overseas in recent decades. Only about 10 percent of the world's chips are made in the United States.

The grant is the second largest awarded by the federal government under a program aimed at reestablishing the United States as a leader in semiconductor manufacturing. It was announced a few weeks after President Biden announced that Intel, another major chipmaker, would receive $8.5 billion in subsidies and up to $11 billion in loans during a tour of battleground states aimed at selling his economic agenda.

He CHIPS Act, which lawmakers approved in 2022, gave the Commerce Department $39 billion to distribute as subsidies to encourage companies to build and expand chip plants across the United States. The program is an important pillar of Biden's economic policy agenda, which focuses on strengthening American manufacturing.

TSMC's award will bring the total announced grants to more than $16 billion. Three smaller companies, Global Foundries, microchip technology and BAE Systemsreceived the first prizes.

In addition to the grants, the federal government will provide up to $5 billion in loans to TSMC. The company is also expected to claim federal tax credits that could cover 25 percent of the cost of building and equipping factories with production equipment. About $50 million of the grants will be set aside to train and develop the company's workforce, federal officials said.

Gina Raimondo, the Commerce Secretary, said the investment would help the United States begin manufacturing the most advanced semiconductors, which are used in artificial intelligence, smartphones and the most sensitive military hardware.

“It's a national security issue that we don't make any of the world's most sophisticated chips in the United States,” Raimondo said Sunday. “Now, thanks to this announcement, these chips will be manufactured in the United States.”

Earlier this year, Raimondo said new investments in semiconductor companies would put the United States on a path to produce approximately 20 percent of the world's most advanced logic chips by the end of the decade.

TSMC's investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs, federal officials said. TSMC will have to meet certain construction and production milestones before making payments.

The company has had federal aid for years. Talks about a partially subsidized expansion in the United States began in 2019, during the Trump administration, according to company officials. TSMC announced for the first time that it would build a New facility in Phoenix in May 2020.a project that company officials said would eventually require government subsidies to help address the increased cost of building and operating chip plants in the United States.

In December 2022, several months after the passage of the CHIPS Act, TSMC announced that it would build a second factory at the site, increasing its total investment from $12 billion to $40 billion.

But since TSMC started construction in 2021, various obstacles They have delayed the start of production. Last summer, TSMC delayed initial production at its first factory until 2025 from this year, saying local workers lacked experience installing some sophisticated equipment. In January, the company said the second plant would not meet its original schedule of beginning manufacturing in 2026.

Production at the second facility is expected to begin in 2028, and production at the third factory is expected to begin by the end of the decade, according to Biden administration officials.

TSMC's expansion in the United States could have a huge impact on the global semiconductor supply chain, whose vulnerabilities were exposed by crippling chip shortage during the pandemic.

TSMC, which pioneered the idea of ​​custom-making chips for others who design them, operates massive factories in Taiwan which produce the vast majority of the small components that supply processing power to computers, phones, networking equipment, household appliances and military equipment. The United States' dependence on the company's factories, on an island that China does not recognize as independent and claims is part of its territory, has long worried American officials.

New generations of production technology are often described in terms of nanometers, or billionths of a meter, a measure of key dimensions of microscopic circuits. In December 2022, TSMC said it would produce three-nanometer chips at its second factory in Arizona. It will now also introduce the next generation of technology, two nanometers, on the second floor, Biden administration officials announced.

These advances determine how many transistors can be packed into each small slice of silicon, allowing chips to perform calculations more quickly and store more data. Over the past decade, TSMC has supplanted Intel in delivering the most sophisticated manufacturing technology, producing components that Apple designs for its latest smartphones and Nvidia develops to power artificial intelligence applications like ChatGPT.

Although the planned addition of two-nanometer technology represents a substantial advance, it does not necessarily mean that TSMC's US factories will offer the latest technology at the same time as its factories in Taiwan. The company conducts research on new technologies on the island, and adapting those processes to high-volume manufacturing is typically done first in nearby buildings to speed the transition and reduce travel time for engineers.

It remains possible that Intel, which is racing to regain its leadership in manufacturing technology, will deliver the industry's most advanced production technology by 2028 in U.S. factories. The company conducts its manufacturing technology research in Oregon.

Biden administration officials are expected to provide more grants in the coming months to other large chipmakers that have invested in new or expanded domestic facilities in recent years, including Micron Technology and Samsung.

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