Biden Administration Finalizes TSMC’s CHIPS Act Award
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The Biden administration has finalized a multibillion-dollar award for Taiwan Semiconductor Manufacturing Co. made possible by the CHIPS and Science Act, marking a major milestone for a program meant to bring semiconductor production back to U.S. soil.
TSMC will get $6.6 billion in grants as part of the contract, the Department of Commerce said in a Nov. 15 statement. Though the amount was disclosed earlier this year as part of a preliminary agreement, the deal is now legally binding — making it the first major CHIPS Act award to reach this stage.
The chipmaker, which is also taking up to $5 billion in loans, will get at least $1 billion of the total this year because it has already achieved some of the benchmarks required, administration officials said.
Finalizing the agreement with TSMC guarantees that cutting-edge semiconductor manufacturing will return to the U.S., bringing essential capabilities onshore, Commerce Secretary Gina Raimondo said in a briefing.
#NEWS: The Biden-Harris Administration announced @CommerceGov awarded TSMC Arizona Corporation up to $6.6B in direct funding under the CHIPS Incentives Program’s Funding Opportunity for Commercial Fabrication Facilities. https://t.co/KUTOdJFO8T pic.twitter.com/bdkI29onhp — U.S. Commerce Dept. (@CommerceGov) November 15, 2024
“This is some of the most sought-after technology on the planet,” she said. “It’s impossible to overestimate how significant this is for America’s national and economic security.”
More deals will be completed in the coming weeks, solidifying one of the country’s biggest pieces of industrial policy in decades and a signature piece of legislation for the outgoing Biden administration.
The CHIPS and Science Act set aside $39 billion in grants, $75 billion in loans and loan guarantees, and 25% tax credits — all to lure semiconductor manufacturing to the U.S. after decades of production shifting to Asia. The vast majority of the funds have been allocated, but only a portion of those awards are set in stone, including one small grant announced in September.
In TSMC’s case, the money will help underwrite more than $65 billion of spending to build a three-factory complex north of Phoenix. More funds will be released when the company hits additional targets. The project is the largest-ever foreign direct investment by a company in a new site, according to the Commerce Department.
Officials are under increasing pressure to wrap up talks and get money out the door. Business groups in four states with projects in line for CHIPS Act funding — Ohio, New Mexico, Oregon and New York — pushed for the immediate release of that money in a recent letter to President Joe Biden, the Columbus Dispatch reported.
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Three of those states have projects by Intel Corp., and that company’s CEO has expressed his frustration with the process. Intel is facing serious business challenges that have complicated its CHIPS Act negotiations. The chipmaker is still working through substantive terms of its contract, including what happens if the company spins off its manufacturing business or is acquired in part or in whole.
President-elect Donald Trump’s return to the White House in January has added urgency to the effort. There’s little fear among companies that the CHIPS Act will go away, but firms like Intel, Samsung Electronics Co. and Micron Technology Inc. are still eager to avoid the possibility of having to renegotiate terms with a new administration.
The CHIPS Act was aimed at spurring economic activity and preserving national security. It passed Congress with bipartisan support. Administration officials said that final agreements aren’t being rushed ahead of the handover and are being announced as they’re completed.
