- Chips and Science Act allocated $39b in grants, alongside $75b in loans and 25% tax credits, as part of a concerted effort to counteract the trend of production outsourcing to Asia.
- Advancement of Chips Act promises not only to revitalise the US semiconductor industry but also to fortify its position in global technology landscape.
The finalisation of the Biden administration’s incentive awards under the Chips Act for the US unit of Taiwan Semiconductor Manufacturing Co. (TSMC) marks a significant achievement in the strategic efforts to rejuvenate domestic semiconductor production.
The Department of Commerce announced that TSMC will receive $6.6 billion in grants, a sum previously disclosed in preliminary agreements but now formalized to create a legally binding contract. The arrangement underscores a critical step in a broader initiative to reintegrate essential semiconductor manufacturing capabilities back onto American soil.
As the largest foreign direct investment project in US history, TSMC’s endeavour to construct a complex of three factories near Phoenix will necessitate a substantial investment exceeding $65 billion.
The funding is not merely financial; it represents a strategic shift towards enhancing America′s technological autonomy.
National security
By achieving initial benchmarks, TSMC stands to receive at least $1 billion this year, illustrating the company’s commitment to accelerating production timelines and fostering innovation within the crucial semiconductor sector.
Commerce Secretary Gina Raimondo said the monumental significance of this development, highlighting that the technology involved is among the most coveted globally.
“The implications extend beyond mere economic growth; securing semiconductor manufacturing domestically is pivotal for national security in an era increasingly characterised by technological competition and geopolitical tension.”
The Chips and Science Act allocated $39 billion in grants, alongside $75 billion in loans and 25 per cent tax credits, as part of a concerted effort to counteract the trend of production outsourcing to Asia.
Further awards soon
With further awards anticipated in the coming weeks, the Chips Act stands as one of the most consequential industrial policies in decades, reflecting a collective commitment across party lines to bolster US manufacturing capabilities.
However, there remains pressure to expedite funding disbursements as various states, including Ohio, New Mexico, Oregon, and New York, await allocations for their semiconductor projects. Intel Corp has expressed particular urgency, grappling with complexities in finalising its contracts amid evolving business challenges.
As the new administration approaches, the urgency of securing these agreements becomes more pronounced. While concerns over the potential for renegotiation linger, the Chips Act’s bipartisan foundation and the commitment to economic and national security mitigate fears of substantial changes.