Biden Administration’s Multi-billion Dollar Boost to U.S. Chip Manufacturing

The Biden administration promised on Monday to give up to USD 6.6 billion to a Taiwanese semiconductor giant so that it can build more facilities in Arizona and make sure that the country can make the world’s most advanced microchips for the first time. Gina Raimondo, the secretary of commerce, said that Taiwan Semiconductor Manufacturing Co. will be able to add a third production hub to its plans for two existing facilities in Phoenix thanks to the funds.

In a call with reporters, Raimondo said, “These are the chips that underpin all artificial intelligence and the chips that are the necessary components for the technologies that we need to underpin our economy.” He also said that they were important for the “21st-century military and national security apparatus.”

The money is tied to a big law that will go into effect in 2022. President Joe Biden has praised this law, which is meant to bring back US chip manufacturing. This USD 280 billion package, called the CHIPS and Science Act, is meant to make the US stronger in military technology and manufacturing while reducing supply problems like the ones that happened in 2021 after the coronavirus pandemic when a lack of chips stopped factory assembly lines and made prices go up.

The Biden government has promised tens of billions of dollars to help build chip foundries in the US and cut down on the country’s reliance on Asian suppliers, which the US sees as a security risk.

“Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems,” Biden said in a tweet. “TSMC’s renewed commitment to the United States and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.” Taiwan Semiconductor Manufacturing makes almost all of the world’s most advanced microchips and wants to do the same thing in the US one day.

In 2021, it started building its first facility in Phoenix. Last year, it started building a second hub, and the company has now put a total of USD 40 billion into both projects. Raimondo said that the company would commit a total of USD 65 billion to the third plant, which should start making microchips by the end of the decade.

With these investments, the US will be able to make about 20% of the world’s most advanced chips by 2030. Raimondo said they would help create 6,000 manufacturing jobs, 20,000 construction jobs, and thousands of other jobs through suppliers in chip-related industries that work with Arizona projects.

On Monday, possible incentives were announced. One is USD 50 million to help train Arizona’s workers so they are better prepared to work in the new buildings. As a bonus, the CHIPS and Science Act would make loans worth about USD 5 billion available.
Lael Brainard, director of the White House National Economic Council, told reporters, “TSMC’s promise to make cutting-edge chips in Arizona is a new beginning for America’s semiconductor industry.”

The news came out while US Treasury Secretary Janet Yellen was traveling in China. Senior administration officials were asked by reporters on the call if the Biden administration told China about the planned investment. This is because of the tense political situation in Taiwan. The officials only said that their main goal in making the news on Monday was to help US manufacturing.

CEO of TSMC C.C. Wei said in a statement, “We are thrilled by the progress of our Arizona site to date and are committed to its long-term success.”