In a move set to significantly bolster semiconductor production in the United States, Taiwan Semiconductor Manufacturing Co (TSMC) is on the brink of securing a substantial federal grant exceeding $5 billion from the U.S. government. Bloomberg News reports that this grant is intended to facilitate the establishment of a cutting-edge chipmaking facility in Arizona.

This landmark investment, part of TSMC’s $40 billion commitment to the Arizona plant, signifies one of the largest foreign investments in U.S. history. The support from the U.S. government comes as part of the broader initiative outlined in the U.S. CHIPS Act, which has allocated a substantial $52.7 billion towards enhancing domestic semiconductor production.

Under the same Act, the Biden administration recently granted $1.5 billion to GlobalFoundries, another prominent contract chip manufacturer. The aim is to bolster the nation’s chip-making capabilities to address the ongoing global shortage, which has particularly affected industries reliant on advanced artificial intelligence chips.

TSMC’s advanced manufacturing processes are integral to producing industry-leading chips, including those used by tech giant Nvidia. However, the company has been grappling with the challenge of meeting escalating demand, particularly for advanced packaging, which has hindered the scaling up of supply for complex AI chips.

While the U.S. move to support TSMC’s endeavors in Arizona is significant, it’s part of a broader global strategy for the semiconductor giant. In 2023, TSMC received substantial subsidies from China and Japan, totaling over $1.5 billion, to support its expansion efforts in those countries. In China, TSMC is expanding a wafer fab in Nanjing, while in Japan, through its joint venture, Japan Advanced Semiconductor Manufacturing (JASM), it’s undertaking ambitious projects in Kumamoto.

JASM’s investments in Japan, supported by significant grants from the Japanese government, underscore the global scale of TSMC’s operations and its strategic partnerships across different regions. Moreover, TSMC’s plans for a wafer fab in Germany, scheduled to open in 2027, further highlight its global expansion ambitions.

Overall, TSMC’s endeavors, spanning multiple continents, reflect the semiconductor industry’s pivotal role in powering various sectors, from automotive to high-performance computing. With substantial government support both in the U.S. and abroad, TSMC is poised to play a crucial role in shaping the future of semiconductor production worldwide.

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