TSMC set to receive $5 billion for Arizona fabs, report says
Taiwan Semiconductor Manufacturing Co. is slated to land more than $5 billion in federal grants to support its Arizona chipmaking facility, according to Bloomberg.
TSMC is making “steady progress in productive, ongoing discussions” with the U.S. government for federal incentives, Bloomberg reported Friday, citing people familiar with the matter.
The federal grant, however, is not yet finalized and it’s unclear whether TSMC plans to tap into loans and guarantees offered under the CHIPS Act, according to Bloomberg.
TSMC declined to comment on the Bloomberg report and its negotiations with U.S. government officials for CHIPS Act funds.
The CHIPS Program Office is in the midst of negotiations with large semiconductor companies for CHIPS Act subsidies and expects to make significant award announcements within four to six weeks, the Business Journal previously reported.
The agency is working through “a dynamic process” with applicants, including discussions about project milestones, funding timelines, and onshoring specific technologies, a U.S. Department of Commerce official told reporters in a teleconference on March 5.
The CHIPS Act includes $39 billion in grants, as well as loans and loan guarantees worth $75 billion to spur semiconductor manufacturing in the U.S., according to the Department of Commerce.
Advanced semiconductor companies — including Intel and TSMC — have requested more than $70 billion in CHIPS Act subsidies, more than double the amount available for U.S.-based projects, Commerce Secretary Gina Raimondo said in Feb. 26 remarks at the Center for Strategic and International Studies in Washington.
Intel is constructing two fabs totaling $20 billion at its Ocotillo campus in Chandler, while Tempe-based Amkor Technology Inc. (Nasdaq: AMKR) is investing $2 billion in an advanced microchip packaging and testing facility in the West Valley that’s expected to create 2,000 new jobs.
TSMC is expected to start high-volume production at its first fab — which currently is under construction in north Phoenix — in the first half of 2025.
On a Jan. 18 earnings call, TSMC Chairman Mark Liu said the company might shift the second fab’s opening date to 2027 or 2028, depending upon customer demand and U.S. government incentives. TSMC had previously announced plans to begin production at the second fab in 2026.
TSMC’s stock closed at a record high of $149.20 a share on March 7 after the company generated $12.6 billion in the first two months of 2024. It marked a 9.4% increase in revenue over the prior year, primarily driven by demand for chips used in artificial intelligence applications, according to the company.
TSMC’s stock closed at $139.02 a share on Monday, down 5%.
Intel also expected to receive federal grants
TSMC’s reported grant award comes as Intel was named a likely recipient of a $3.5 billion grant to create a “secure enclave” to produce advanced semiconductors for the U.S. military and intelligence programs. The grant is part of a spending plan that passed the U.S. House on March 6 and pulls funding from the CHIPS Act, according to Bloomberg.
What’s more, Intel is reportedly negotiating a $10 billion federal CHIPS Act funding package in what would be the largest award announcement to date, Bloomberg reported. It’s unclear whether the $10 billion CHIPS Act award package would be separate from Intel’s $3.5 billion military grant.
To date, the Department of Commerce has announced three CHIPS Act investments for BAE Systems Inc., Arizona-based Microchip Technology and GlobalFoundries, which is set to receive nearly $1.5 billion in federal subsidies for a new fab and modernization of its existing facilities in New York and Vermont.