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Chip giant TSMC and the US agree to make advanced products in Arizona

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Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest chipmaker, has agreed to manufacture its most advanced products in Arizona starting in 2028, supporting the Biden administration’s efforts to bring the semiconductor supply chain home.

TSMC will produce state-of-the-art 2-nanometre chips at its second Phoenix fab.

The company will also increase its investment in the US from $40 billion to $65 billion and build a third fab with 2nm or more advanced technology to be operational by 2030.

The Taiwanese company and the US Department of Commerce announced on Monday that Washington will provide the company with $6.6 billion in grants and up to $5 billion in loans.

The grants are part of the Chip Act, which was passed in 2022 to revive US industry. Last month, the Biden administration announced an $8.5 billion grant and up to $11 billion loan agreement for Intel, which has pledged $100 billion in new investment.

TSMC’s commitment helps the White House meet its goal of moving 20 per cent of the world’s advanced semiconductor production onshore by 2030. About 90 per cent of advanced chips are currently made in Taiwan.

US Secretary of Commerce Gina Raimondo said: “TSMC is expanding its manufacturing capacity in Arizona so that, for the first time, we will produce the world’s most advanced semiconductor chips right here in the United States. We are significantly strengthening our national security position,” Raimondo said.

The deal means some of the most advanced chips used in artificial intelligence could be made in the US by the end of the decade, rather than chipmakers such as Nvidia and AMD having to rely on production in Asia.

“Our US operations enable us to better support our US customers, which include many of the world’s leading technology companies,” said Mark Liu, president of TSMC.

TSMC had previously planned to operate its US factories using manufacturing technology that was a generation older than the most advanced technology used in mass production in Taiwan. The first Arizona plant was to begin 4nm production next year, and the second would introduce 3nm two or three years later.

But most AI chips will run on 3nm from next year or 2026.

By the time TSMC’s second Arizona fab opens, Nvidia and other AI chipmakers will have moved to 2nm, an engineer familiar with the process told the FT. That’s why TSMC’s original plan for this fab to run at 3nm “didn’t make sense”, a company executive said.

Raimondo said: “The chips that TSMC makes … are the foundation of all AI. It takes tens of thousands of precursor chips to train a single precursor AI model, and now, thanks to this agreement, those chips will be made in the US,” Raimondo said.

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Trump and Biden neck-and-neck in key battleground states

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US President Joe Biden and Republican rival Donald Trump are running neck-and-neck in the November presidential election, according to a new Reuters/Ipsos poll.

Forty per cent of registered voters in the eight-day survey, which ended on Tuesday, said they would vote for Democrat Biden if the election were held today, while the same proportion chose former US president Trump. This is little changed from Biden’s 1-point lead in the Reuters/Ipsos poll conducted on 29-30 April.

According to the poll, which has a margin of error of about 2 percentage points among registered voters, many voters remain undecided nearly six months before the November 5 election.

Twenty per cent of registered voters surveyed said they had not chosen a candidate, were leaning towards third party options or might not vote at all.

Thirteen per cent said they would vote for Robert Kennedy Jr, who entered the race as an independent, if he appeared on the ballot with Trump and Biden. In the previous poll, conducted in April, Kennedy had 8% support.

While the ongoing lawsuits against him challenge Trump, Biden faces difficulties because of his age and his stance on the Gaza war.

When respondents were not given the option of voting for a third candidate or saying they were not sure who they would vote for, both candidates were tied at 46 per cent among registered voters; 8 per cent of respondents declined to answer the question.

Among registered voters who say they are “absolutely certain” they will vote in November, Biden leads by a slim 3-point margin.

In the 2020 presidential election, when Biden defeated Trump, only two-thirds of voters went to the polls.

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Pro-Palestinian protesters demonstrate inside CUNY Graduate Center in Manhattan

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In the US, pro-Palestinian protesters briefly occupied the lobby of the CUNY Graduate Center in Manhattan on Tuesday night, nearly two weeks after a massive police crackdown at the City College of New York (CUNY) and other campuses.

Students demonstrated for several hours in the lobby, hanging banners and calling the centre’s library the “Aqsa University Library”.

Aqsa University, the oldest public university in Gaza, was demolished during the Israeli occupation.

Outside the Graduate Centre, a group of protesters waved Palestinian flags in the rain in support of their friends. Dozens of police lined the street outside the building, but did not enter.

Students participating in the demonstration called on the administration to negotiate divestment from “Israeli arms, technology and surveillance companies”.

At 10.30 p.m. US time, the students emerged from the Graduate Centre and declared victory, telling protesters on the street that after negotiations, the CUNY administration had agreed to take their demands to the entire student body.

The protesters then evacuated the library and staff immediately began cleaning it.

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US announces new tariffs on China

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US President Joe Biden has slapped new tariffs on cheap electric vehicles, batteries, solar equipment and other products imported from China.

“President Biden’s economic plan supports investment and creates good jobs in key sectors vital to America’s economic future and national security,” the White House said in a statement.

Claiming that China’s “unfair trade practices” in technology transfer, intellectual property and innovation threaten American companies and workers, Washington said Beijing was also flooding global markets with “artificially low-priced exports”.

In this context, the White House announced that Joe Biden had directed the US Trade Representative to increase tariffs on $18 billion of Chinese imports under Section 301 of the 1974 Trade Act in order to “protect American workers and businesses” in “response to China’s unfair trade practices” and to “remedy the resulting injury”.

Arguing that American workers and businesses can outperform anyone else “as long as there is fair competition”, the White House claimed that the Chinese government has long resorted to “unfair, non-market practices”.

“China’s forced technology transfers and intellectual property theft have created unacceptable risks to America’s supply chains and economic security by allowing it to control 70, 80 and even 90 per cent of global production of critical inputs needed for our technologies, infrastructure, energy and health care,” the statement said.

It also noted that these “non-market policies and practices” have contributed to China’s growing overcapacity and export surges that “threaten to significantly harm” American workers, businesses and communities.

“The actions taken today against China’s unfair trade practices are carefully targeted at strategic sectors where the United States, under President Biden, has made historic investments to create and sustain good-paying jobs, unlike recent Republican proposals in Congress that would threaten jobs and raise costs across all sectors,” the Biden administration said, also criticising Republican proposals.

The new tariffs announced by the White House are as follows:

– From 25 per cent to 100 per cent in 2024 for electric vehicles;

– Tariffs on lithium-ion batteries for electric vehicles from 7.5 per cent to 25 per cent in 2024;

– For semiconductors, from 25 per cent to 50 per cent by 2025;

– For solar cells from 25% to 50% in 2024;

– 0% to 50% in 2024 for certain medical products such as syringes and needles;

– Tariffs on certain steel and aluminium products from 0-7.5% to 25% in 2024.

National Economic Council Director Lael Brainard told reporters that they were designed to ensure that US green technology and manufacturing industries “are not undermined by a flood of unfairly low-priced exports from China in areas such as electric vehicle batteries, critical medical devices, steel and aluminium semiconductors, and solar energy”.

According to Axios, Biden administration officials said they do not know how or if Beijing will retaliate, but they expect Beijing to speak publicly and raise its voice.

“I hope we don’t see a significant response from China, but that’s always a possibility,” Treasury Secretary Janet Yellen told Bloomberg.

White House officials argue that the tariffs will not increase US inflation because the amount of goods they target is too small.

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