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.
