The U.S. Commerce Department has finalized a US$6.6 billion subsidy for Taiwan Semiconductor Manufacturing Co’s (TSMC) U.S. subsidiary.

This subsidy supports semiconductor production in Phoenix, Arizona, and is part of a US$52.7 billion initiative established in 2022.

TSMC plans to increase its investment in its Arizona operations to US$65 billion.

By 2030, it aims to construct a third fabrication plant. The second Arizona facility will start producing 2-nanometer technology by 2028 and incorporate A16 chip manufacturing.

As part of the subsidy, TSMC will receive up to US$5 billion in low-cost government loans. These loans will be provided upon achieving certain project milestones. It is anticipated that at least US$1 billion will be distributed by the end of the year.

An “upside sharing agreement” is in place, requiring TSMC to share excess profits with the U.S. government. Additionally, it will refrain from stock buybacks for five years, with some exceptions.

The Chips and Science Act, enacted in 2022, aims to boost U.S. semiconductor manufacturing. Commerce Secretary Gina Raimondo highlights its importance for the expansion of TSMC and other companies in the U.S.

The Act allocates $36 billion to chips projects, including investments in Samsung’s Texas facility, Intel, and Micron Technology.

While emphasizing the strategic importance of TSMC’s U.S. expansion, Secretary Raimondo did not confirm reports that TSMC had been ordered to stop shipping advanced chips to Chinese customers. She stressed prudence in national security matters.

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