The US Commerce Department on Monday proposed investing up to $6.6 billion to finance a third Taiwanese Semiconductor Manufacturing Co., Ltd. (TSMC) in Arizona. The funding will come through the Chips and Science Act, in an effort to boost the production of more domestic semiconductors.
The move represents a broader push to bring more manufacturing to the United States, but the potential escalation of tensions with China was not heralded in the hype surrounding today's announcement.
The proposed FAF is a new facility – meaning it is custom-built from the ground up. It will focus on 2nm (“or later”) architectures, designed for a wide range of different applications, including computing, 5G/6G wireless communications, and of course, artificial intelligence. TSMC Arizona — the subsidiary behind the proposed construction — has said it will build the facility before the end of the decade.
The chipmaker says the construction will bring more than 20,000 jobs to the area, while it expects to create about 6,000 manufacturing jobs once the facility is operational.
Domestic manufacturing has been a key focus of the Biden administration, as the COVID-19 pandemic has highlighted vulnerabilities in the global supply chain. These issues have been exacerbated by the prevalence of silicone in our daily lives. These numbers are only growing. According to the Semiconductor Trade Association, global sales reached $47.6 billion in January 2024, representing an increase of more than 15% from the previous year.
“TSMC’s renewed commitment to America and its investment in Arizona represent the broader story of made-in-America semiconductor manufacturing and the strong support of America’s leading technology companies to build the products we depend on every day,” President Biden said in a statement. Statement related to the news.
Much of the administration's funding has focused on US companies such as Intel, which had its own proposal targeting $8.5 billion by the end of March. However, TSMC is an 800-pound gorilla, both in terms of market share and technological advancement. However, the company finds itself amid looming geopolitical concerns. The United States and its allies would be at a severe disadvantage if China took control of Taiwan and its manufacturing capabilities.
TSMC has its own concerns about such a scenario. For one thing, the company's two largest customers — Apple and Nvidia — are American. On the other hand, some in the United States have gone so far as to suggest making bombs in the country, should such things happen.
“We have to make it very clear to the Chinese, if you invade Taiwan, we are going to blow up TSMC,” Seth Moulton, a Massachusetts congressman, said at an event in May.
The Democratic representative has since distanced himself from the clip, stating that it was selectively edited by the Chinese Communist Party. However, he is not the only one making such suggestions. Earlier the same year, Robert O'Brien, Trump's former national security adviser, stated that “the United States and its allies will never allow these factories to fall into the hands of China,” suggesting that the country was destroying the factories. O'Brien went so far as to compare such hypothetical actions to Britain's actions during World War II.
Such a threat of war has drawn international criticism. Beyond the obvious ethical issues, such a dodgy measure would have a huge impact on the global economy. In addition to Apple and Nvidia, TSMC also serves Sony, MediaTek, AMD, Qualcomm, Broadcom and others.
For all the money the US government continues to invest, Intel is simply trying to catch up to the technological lead that TSMC has achieved over several years. TSMC makes about 90% of the world's most advanced chips. Right now, the best defense the United States has against future disruptions — whether pandemics or geopolitical conflicts — is to diversify supply. This applies to where components are manufactured and by whom.
While the architects of the Chip and Science Act would no doubt want to raise the bar for American companies that manufacture domestically, ours is a global economy. TSMC certainly recognizes the value of supply chain distribution.
“The proposed funding from the CHIPS and Science Act will provide TSMC with the opportunity to make this unprecedented investment and provide our foundry service for the most advanced manufacturing technologies in the United States,” Mark Liu, president of the chip giant, said in a statement related to the CHIPS and Science Act. News. “Our US operations allow us to better support our US customers, including many of the world's leading technology companies. Our US operations will also expand our ability to pioneer future developments in semiconductor technology.”
Among those monitoring US-China relations, the upcoming presidential election may represent a major turning point. For example, former President Trump dramatically escalated trade tensions. Huawei's addition to the Entity List represents a major setback for the mobile phone company, as it has lost access to key components from US companies such as Google and Qualcomm.
Speaking last year, Avril Haines, Biden's former US director of national intelligence, noted that if the US invasion led to the shutdown of Taiwan-based TSMC's product, “it would have a massive global financial impact that I think would be somewhere between $600 billion to $1 trillion on a global scale.” . On an annual basis for the first few years.”
