TSMC getting $6.6B in new federal funding, to build 3rd semiconductor fab in Phoenix

PHOENIX — The Biden administration agreed to give the Taiwan Semiconductor Manufacturing Company $6.6 billion to support its expansion in Phoenix, officials announced on Monday.

TSMC also said it will build a third fab in Phoenix before the end of the decade. The term “fab” refers to a semiconductor fabrication plant. Companies like TSMC use these plants to make the semiconductor chips that power smartphones, cars, satellites and weapons systems.

“America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%,” President Joe Biden said in a statement.

This exposed the U.S. to economic and national security vulnerabilities, he added.

“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,” Biden said.

The Biden administration’s new direct funding comes from the CHIPS Act, which is designed to encourage domestic manufacturing of semiconductors.

The third fab will bring TSMC’s total investment in Arizona to over $65 billion. The company is also working on two other fabs in north Phoenix. The first is scheduled to be operational in the first half of 2025.

How will the new TSMC facility benefit Phoenix?

Phoenix Mayor Kate Gallego said this is great news for the Valley’s long-term economic prospects.

“When TSMC chose to expand to Phoenix, it marked the largest foreign direct investment in United States history. Today’s CHIPS funding announcement marks the largest federal award Arizona has ever received, making history once again,” Gallego said in a statement.

BIG NEWS! #TSMC will receive up to $6.6 billion in CHIPS Act funding from the federal government—and they will build a third fab in north Phoenix.

These investments will create thousands of high-wage jobs for families and transform our economy for generations to come. 1/3 pic.twitter.com/7VSrUOP7yo

— Mayor Kate Gallego (@MayorGallego) April 8, 2024

“The ripple effects from both TSMC’s expansion and the federal government’s investment will go far beyond our city limits,” Gallego said. “They will shape the trajectory of our entire region, create thousands of high-wage jobs to support families and fuel strong economic growth for generations to come.

Semiconductor facilities to bring new jobs to the Valley

The U.S. Department of Commerce specified which jobs the TSMC facilities will bring to the region:

• Around 6,000 manufacturing jobs
• Over 20,000 accumulated unique construction jobs
• Tens of thousands of indirect jobs

The news about the funding marks the second major federal infusion into Phoenix-area microchip manufacturing companies announced in recent weeks.

Intel is also set to receive billions of dollars in CHIPS Act funding. The White House announced it would give the company $8.5 billion in funding and another $11 billion in loans last month before Biden visited Chandler.

The influx of funding for Intel would lead to a combined 30,000 manufacturing and construction jobs, Biden said last month while visiting the company’s Chandler campus.