Apple chip maker TSMC wins $6.6 billion US subsidy

TSMC's headquarters in Hsinchu, Taiwan

Taiwan Semiconductor Manufacturing Co (TSMC) is the manufacturer of the processors in Apple's iPhones, iPads, and Macs. While the majority of its manufacturing continues to take place in Taiwan, TSMC has also been creating other plants in places such as Germany and especially in Arizona.

According to Reuters, TSMC has agreed to expand that Arizona investment in order to build a third fabrication plant by 2030. It involves TSMC again increasing its US investment, this time by a further $25 billion to $65 billion.

The subsidy, and further related government loans of up to $5 billion, have been awarded by the US Commerce Department. The Department claims that TSMC's $65 billion is the largest foreign investment in a completely new US project in America's history.

TSMC's second Arizona plant, now expected to begin production in 2028, will be specifically for the manufacture of 2 nanometer processors. The first plant is for older processes, still in use across the globe.

"These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin our economy," Commerce Secretary Gina Raimondo said, "[and] frankly, a 21st century military and national security apparatus."

The US Commerce Department is funding the TSMC award and loans through the Chips Act. Also known as the CHIPS for America Fund, this is a $53 billion grant pool that was approved by Congress in 2022.

Besides the fabrication plants, TSMC is said to have committed to supporting the development of chip packaging facilities in the US. That would mean firms being able to buy entire advanced chip packages that are made entirely in the US.

That contrasts with previous news that despite TSMC using its Arizona plants to make processors for Apple, it will continue to send them to Taiwan for the final stages.

The commitment to building a third plant in Arizona is also a contrast to TSMC's previous complaints about what it has described as unacceptable terms. Due to the nature of US/Taiwan relations, there is no reciprocal tax arrangement, which means that TSMC currently ends up paying tax twice.

When all three TSMC plans are operational, the US Commerce Department claims that there will be 6,000 direct manufacturing jobs. That comes on top of an estimated 20,000 jobs in construction.

There has been no comment, however, on issues that construction workers' unions have had about the first and second plants being build in Arizona. TSMC has been accused of having construction so unsafe that it has led to deaths.