The Taiwan Semiconductor Manufacturing Company (TSMC) has been granted $6.6 billion as part of the CHIPS and Science act to fund the domestic manufacturing of semiconductors on US soil.
The funding, confirmed by the US Department of Commerce, will help migrate TSMC’s manufacturing capabilities from Taiwan to planned factories in Arizona, distancing semiconductors used in US defense and industry from the espionage capabilities of China.
So far, $8.5 billion has been allotted to Intel, and a further $1.5 billion to GlobalFoundries, with the US looking to diversify its investments into domestic manufacturing of semiconductors.
Critical supply chain under threat
The CHIPS and Science Act passed as bipartisan legislation in 2022 and allocated $280 billion to boost the domestic manufacturing of critical technical components, with a significant amount of the total funding reserved for semiconductors.
Semiconductors are a critical component necessary for most electronics, and TSMC currently produces just over 60% of the world's semiconductors. However, the recent 7.4 magnitude earthquake that struck the small island nation of Taiwan demonstrates the volatility of the supply chain, and further highlights its susceptibility to both natural disasters and state-sponsored espionage from China.
Many significant industries such as AI, and the hardware that AI is reliant on to operate, require a stable and secure supply of semiconductors especially as these industries are experiencing a significant boom, generating thousands of jobs and boosting economies.
In a statement released by the US Department of Commerce, President Joe Biden said, “America invented these chips, but over time, we went from producing nearly 40% of the world’s capacity to close to 10%, and none of the most advanced chips, exposing us to significant economic and national security vulnerabilities.”
“I was determined to turn that around, and thanks to my CHIPS and Science Act – a key part of my Investing in America agenda – semiconductor manufacturing and jobs are making a comeback.”
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