TSMC strikes $11.6bn deal with White House to expand AZ plans

TSMC, the world's largest chipmaker, has struck an $11.6bn deal with the United States to bolster president Joe Biden's ambitions in AI chip development, it was revealed on Monday.

The agreement entailed constructing cutting-edge facilities in Arizona by 2028.

According to the Financial Times, the deal would see TSMC manufacturing the latest two-nanometer chips at a fabrication plant in Phoenix in an upgrade from the company's initial plans.

The fab was expected to be operational alongside the first facility in Arizona, which was set to start production next year.

TSMC also committed to increasing its total investment in the US to $65bn from $40bn, with plans to build a third fab using two-nanometer or even more advanced technology by 2030.

To support that, the US federal government would provide subsidies worth $6.6bn in grants and up to $5bn in loans under the Chips Act, passed in 2022 to bolster domestic chip manufacturing.

The collaboration aligned with the White House's goal of onshoring 20% of the world's advanced semiconductor manufacturing by 2030.

Increasing concerns over a potential invasion of chip manufacturing hub Taiwan by China had propelled efforts to strengthen domestic semiconductor production in the US.

Reporting by Josh White for Sharecast.com.