The Biden administration has finalized a $6.6 billion grant for Taiwan Semiconductor Manufacturing Company (TSMC) to support the construction of massive chip factories in Phoenix, despite concerns that President-elect Donald Trump may disrupt subsidies aimed at bolstering the domestic semiconductor industry.
“This is a monumental announcement,” Commerce Secretary Gina Raimondo stated during a call with reporters, 10 days after Trump’s election. “It represents one of the most critical investments for advancing our economic and national security.”
TSMC plans to invest $65 billion to build three advanced fabrication plants, or fabs, in Arizona, which are expected to create thousands of jobs. These facilities will produce semiconductors essential for powering computers, smartphones, self-driving cars, fighter jets, artificial intelligence, and other technologies.
U.S. officials acknowledged that Trump’s election influenced the timing of the funding. “Over the next two months, Commerce will continue to finalize additional awards to ensure progress extends into the next decade,” said Lael Brainard, director of the National Economic Council, two months before Trump’s inauguration.
The funding stems from the CHIPS and Science Act, a signature Biden initiative that allocates $52.7 billion for chip manufacturing, research, and workforce development in the U.S. TSMC, one of the world’s leading chipmakers, also secured up to $5 billion in loans as part of this initiative. The company manufactures chips for top tech firms, including Apple, NVIDIA, and AMD.
TSMC’s commitment to U.S. manufacturing began in May 2020 with the announcement of its first Arizona fab, which started production in April 2024. After Biden signed the CHIPS Act in August 2022, TSMC announced plans for a second fab in December of that year, expected to be operational by 2028. A third fab was revealed in April 2024 alongside the announcement of federal subsidies.
To qualify for CHIPS Act funding, TSMC must meet specific construction and production milestones. The company has already achieved enough progress to receive at least $1 billion by the end of 2024, with additional funds disbursed as the project advances. “It’s a binding contract,” said Ryan Harper, White House CHIPS implementation coordinator, emphasizing the government’s commitment.
Early production yields at TSMC’s Arizona fab are reportedly on par with those of its facilities in Taiwan, according to Bloomberg. Raimondo praised the progress, calling it “unbelievable.” She added, “For those who doubted, it’s happening—the proof is in the pudding.”
TSMC’s Arizona plants mark the largest foreign direct investment in U.S. history, according to the White House. President Biden highlighted the significance, noting that while semiconductors were invented in the U.S., only 10% are now manufactured domestically, with advanced chips produced exclusively overseas. Once TSMC’s first fab becomes fully operational, Biden said, it will mark the first time in decades that cutting-edge chips are manufactured on American soil.