US invests billions in domestic AI chip plants
The US Government has agreed to give AI chip manufacturer, TSMC, $11.6B in funding to build three AI chip factories in the US.
Under the CHIPS and Science Act–which allocates $39B in grants and $75B in loans and guarantees to home-grown semiconductor companies, to establish manufacturing operations in the U.S and encourage domestic production of advanced computer chips–the US government has preliminarily agreed to give Taiwan Semiconductor Manufacturing Company (TSMC) $11.6 billion in funding to build three AI chip manufacturing plants in Arizona. In return, as part of the deal, TSMC will also increase its total US investments to $65B.
The agreement between TSMC and the US government
The $11.6B, which comprises $6.6B in grants and up to $5B in loans, is the largest financial package the US government has approved, under the CHIPS and Science Act, and the largest foreign investment in a brand-new development project, in US history.
However, it’s not a done deal for TSMC, quite yet. The agreement between them and the Government is still pending, as they have to go through a standard due diligence period, and then fulfill a series of construction and production benchmarks to secure the funds. And if they fail to meet these benchmarks on time, they may be forced to return the funds.
The deal is part of the Biden administration's initiative to revitalize the USA’s AI chip industry, strengthening its technological independence, and decreasing reliance on chip suppliers from countries like South Korea and Taiwan.
But TSMC isn’t the only chip manufacturer getting a boost from the US government to build chip factories on US soil: Intel was awarded $20B in loans and grants to build four factories across four states (including Arizona), and Samsung is reportedly about to receive $6B in grant money and is expected to double its investment in its chip production facility in Texas to $44B.
TSMC’s AI chip factories
Two of TSMC’s plants are already under construction and are expected to begin high-volume chip production in early 2025, and 2028. It remains unknown when the third factory, will start manufacturing, but it is rumored that this plant will manufacture highly advanced AI chips.
The factories will be a huge boost for Arizona and the economy, as they will create over 6,000 high-tech manufacturing and 20,000 construction jobs, with a $50M budget for upskilling local workers.
