The US government announced plans to allocate $6.6 billion to the world’s largest semiconductor chip manufacturer to assist in constructing a new facility in Arizona. The aim is to strengthen domestic production of these vital chips and reduce dependence on China.
The White House announced an agreement with Taiwan Semiconductor Manufacturing Company (TSMC) to provide funding for the fabrication plants, or “fabs,” based in Phoenix, along with $5 billion in government loans. According to the Commerce Department, this represents the largest foreign direct investment in a new development project in US history.
“America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%, and none of the most advanced chips,” President Biden said. “(That exposes) us to significant economic and national security vulnerabilities.”
The news comes less than a week after Taiwan was hit with its biggest earthquake in 25 years, slowing the production of its chips.
TSMC, responsible for 90% of the world’s semiconductor production, had previously committed $40 billion to establish two production hubs in the state. These factories are scheduled to commence chip production in 2025 and 2028.
“These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin our economy,” added Commerce Secretary Gina Raimondo.
Apple and Nvidia, two of TSMC’s biggest clients, praised the announcement. Apple CEO Tim Cook said his company was “proud to play a key part in the expansion of TSMC’s US production.” Nvidia head Jensen Huang, meanwhile, added that his company’s “ongoing innovation in artificial intelligence would not have been possible without them.”