TSMC Boosts Joe Biden’s AI Chip Ambitions with $11.6B US Production Deal

The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co, has agreed to manufacture its most advanced products in Arizona starting in 2028, in a boost to the White House’s efforts to bring semiconductor production domestically.

TSMC will manufacture the latest 2-nanometer chips at a factory, or factory, it is building in Phoenix, Arizona, marking an upgrade from its previous plans.
This installation will be the company’s second in the US. The first, which is also in Arizona and was announced in 2020 during the Trump administration, will begin production next year.

TSMC also said on Monday that it will increase its total investment in the US from $40 billion to $65 billion to build a third factory, with 2nm technology or even higher, that will be operational in 2030.

The Taiwanese company and the US Commerce Department said on Monday that Washington would provide support worth $6.6 billion in grants and up to $5 billion in loans.

The subsidies fall under the Chip Act, which was passed in 2022 to boost chip production in the US. Last month, the Biden administration revealed a deal for $8.5 billion in grants and up to $11 billion in loans for Silicon Valley’s Intel, which promised $100 billion in new investment.

TSMC’s commitment helps the White House move toward its goal of bringing 20% ​​of the world’s advanced semiconductor production onshore by 2030.

Growing fears of a Chinese invasion of Taiwan, where 90% of the latest generation chips are currently manufactured, have led the US to intensify efforts to increase its national semiconductor production.

“TSMC is expanding its manufacturing capabilities in Arizona in such a way that, for the first time, we will manufacture, at scale, the most advanced semiconductor chips on the planet right here in the United States of America,” said U.S. Secretary of Commerce Gina Raimondo . “[Estamos] greatly strengthening our national security position.”

“Our U.S. operations allow us to better support our U.S. customers, which include many of the world’s leading technology companies,” said Mark Liu, president of the leading chip contract manufacturer.

The latest plans will bring U.S. semiconductor production closer to state-of-the-art as artificial intelligence drives demand for ever more computing power.

TSMC previously planned to operate its U.S. factories with older manufacturing technology than its more advanced mass production in Taiwan.
By 2026, most AI chips will run at 3nm, meaning the production capabilities of TSMC’s first factory in Arizona will be insufficient.

By the time TSMC’s second factory in Arizona opens in 2028, Nvidia and other AI chip suppliers will likely have moved to 2nm, said an engineer familiar with the process. So TSMC’s original plan to have that plant running at 3nm “didn’t make sense,” said a company executive.

The US hopes the deal with TSMC will mean that some of the most advanced chips used in AI could be partially manufactured in the US by the end of the decade, reducing dependence on chipmakers such as Nvidia and AMD on Asian production.

“The chips that TSMC makes. . . underpin all AI. Tens of thousands of cutting-edge chips are needed to train a single-frontier AI model [como o GPT4 da OpenAI],” said Raimondo. “And now, because of this announcement, these chips will be manufactured in the United States of America.”

But industry executives and analysts said that claim went too far.
“Having 2nm in the second fab doesn’t mean Nvidia won’t buy more chips made in Taiwan,” said a person familiar with TSMC’s plans, “it just means they will have the option to issue a special requirement that a certain large part of your chips come from that factory [do Arizona].

TSMC’s cutting-edge manufacturing investment in the country continues to far outpace that in the US. It will begin mass production of 2nm next year and plans to build “multiple” factories operating on the technology at three sites in Taiwan, Liu told investors in January.

With information from the Financial Times.