Taiwan Semiconductor Manufacturing Corp. TSM is set to receive up to $5 billion in grants from the U.S. government to expand its chip fabrication facility in Arizona.
Reports from Bloomberg indicate that the world’s largest contract chipmaker is on the verge of an official announcement regarding the deal, with speculations on the source of the award, possibly from the $52 billion CHIPS Act fund dedicated to enhancing U.S. semiconductor manufacturing.
In a strategic move back in May 2020, TSMC revealed plans to inject $12 billion into a semiconductor manufacturing facility in Phoenix, Arizona, aimed at fortifying its production capabilities in the United States. Subsequently, in December of the same year, a second fab in Phoenix was announced, bumping the total investment to $40 billion.
Highlighting the significance of this expansion, the company expressed, “TSMC Arizona will be pivotal in advancing the U.S. government’s agenda of onshoring semiconductor manufacturing to bolster national economic competitiveness.” Construction of the initial fab commenced in April 2021, with volume production slated for the first half of 2025. The second fab is anticipated to follow suit two to three years later.
Notably, TSMC already runs a fab in the State of Washington.
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TSMC’s Key Customers in Proximity
Among TSMC’s elite clientele, Apple Inc. AAPL, referred to as “Customer A” in its Securities and Exchange Commission filings, contributed 25% ($17.5 billion) of the chipmaker’s revenue in 2023, as per financial expert Dan Nystedt.
While the company maintains confidentiality regarding business associations, it is widely believed that “Customer B” from their past filings is none other than Nvidia Corporation NVDA, responsible for 11% ($7.73 billion) of TSMC’s annual income.
Other notable clients include Advanced Micro Devices Inc. AMD, Broadcom Inc. AVGO, and Qualcomm Inc. QCOM. All these tech giants, alongside Apple and Nvidia, have headquarters in California, making TSMC’s Phoenix location ever more convenient.
Additional details on TSMC’s government grant and other CHIPS Act benefits are anticipated to unfold in the forthcoming days and weeks, aligning with President Joe Biden’s agenda as he gears up for his re-election campaign.
The only official acknowledgment of a CHIPS Act grant to date has been to GlobalFoundries Inc. GFS, with a $1.5 billion allocation to expand manufacturing facilities at its sites in Malta, New York, and Vermont.
The CHIPS Act was initiated in 2022 to boost local semiconductor production following severe supply chain disruptions that impeded production across various industries.
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