The US Commerce Department said on Monday (Apr 8) it would award Taiwan Semiconductor Manufacturing Co’s (TSMC) US unit a US$6.6 billion subsidy for advanced semiconductor production in Phoenix, Arizona, and up to US$5 billion in low-cost government loans.

TSMC agreed to expand its planned investment by US$25 billion to US$65 billion and to add a third Arizona fab by 2030, the Commerce department said in announcing the preliminary award. The Taiwanese company will produce the world’s most advanced 2 nanometer technology at its second Arizona fab, expected to begin production in 2028, the department said.

“These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin our economy, but frankly, a 21st century military and national security apparatus,” Commerce Secretary Gina Raimondo said in a statement.

TSMC, the world’s largest contract chipmaker and a major supplier to Apple and Nvidia, had previously announced plans to invest US$40 billion in Arizona. TSMC expects to begin high-volume production in its first US fab there by the first half of 2025, the Commerce department said.

The US$65 billion-plus investment by TSMC is the largest foreign direct investment in a completely new project in US history, the department said.

Congress in 2022 approved the Chips and Science Act to boost domestic semiconductor output with US$52.7 billion in research and manufacturing subsidies. Lawmakers also approved US$75 billion in government loan authority.

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TSMC Arizona has also committed to support the development of advanced packaging capabilities through partners in the US to allow customers to purchase advanced chips that are made entirely on US soil, the department said, adding 70 per cent of TSMC customers were US companies.

TSMC CEO CC Wei said the company would help US tech firms “unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona.”

The projects will create 6,000 direct manufacturing jobs and 20,000 construction jobs. The department said 14 direct TSMC suppliers plan to construct or expand US plants.

At full capacity, TSMC’s three fabs in Arizona will manufacture tens of millions of leading-edge chips in 5G/6G smartphones, autonomous vehicles, and AI data centre servers, the department said.

Through its Arizona fabs, TSMC will support key customers like Apple, Nvidia, Advanced Micro Devices and Qualcomm “by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era,” the department added.

The Commerce department last month announced US$8.5 billion in grants and up to US$11 billion in loans for Intel to subsidise leading-edge chip production from the same programme.

The department is expected to unveil an award for South Korea’s Samsung Electronics as soon as next week, sources said. The US Commerce department declined to comment. Samsung did not respond immediately to a request for comment. REUTERS