The Biden administration awarded Taiwan Semiconductor Manufacturing Co. up to $6.6 billion to build semiconductor manufacturing facilities in Phoenix, the second-largest funding project to date under the CHIPS and Science Act of 2022.
The Department of Commerce, which is overseeing the distribution of $52 billion in CHIPS and Science Act funding to semiconductor companies, said the $6.6 billion will support TSMC’s $65 billion investment into building three fabrication facilities in Phoenix. The award goes to TSMC Arizona Corp., a subsidiary of TSMC, and marks the fifth company to receive a funding award from the CHIPS and Science Act to expand semiconductor manufacturing in the U.S. Intel has received the largest grant to date, up to $8.5 billion to build new facilities in Arizona and Ohio, while modernizing existing facilities in New Mexico and Oregon. Intel plans to invest $100 billion in chip facilities over the next five years.
The U.S. is in a global race to boost domestic semiconductor manufacturing as countries look to diversify their supply chains. According to the Department of Commerce, the U.S. is on track to produce roughly 20% of the world’s leading-edge semiconductor chips by 2030, up from a global market share of roughly 11% currently. Asia, including China and Taiwan, maintains the largest share of the semiconductor manufacturing market.
TSMC intends to build two fabs in Phoenix, but the CHIPS and Science Act funding will support the company’s plan to build a third facility, according to a Commerce Department news release.
“One of the key goals of President Biden’s CHIPS and Science Act was to bring the most advanced chip manufacturing in the world to the U.S., and with this announcement and TSMC’s increased investment in their Arizona campus, we are working to achieve that goal,” said Commerce Secretary Gina Raimondo in the release.
As the U.S. races to build out its semiconductor manufacturing capabilities, it will face hurdles such as developing a workforce as it continues to fund more companies.
More semiconductor projects ahead
Over the next few weeks, the Department of Commerce will likely make additional CHIPS and Science Act funding announcements, including for chipmakers like Samsung and Micron Technology, and other companies, said Gartner analyst Gaurav Gupta.
SK Hynix, a high-bandwidth memory chip maker, plans to build a $4 billion advanced packaging facility in West Lafayette, Ind., and could potentially receive CHIPS and Science Act funding to support the project.
Over the years, U.S. semiconductor manufacturing has slowly declined as production shifted to Asia. However, the COVID-19 pandemic caused a shortage in semiconductors — essential for powering phones, laptops, cars and other powerful technologies — prompting the U.S. government to reassess domestic semiconductor production and pass the CHIPS and Science Act.
Gaurav GuptaAnalyst, Gartner
“The idea remains the same, that the U.S. government wants to motivate companies to set up facilities within the U.S. to increase the regional share of chip manufacturing in the U.S.,” Gupta said.
He said the success of the CHIPS and Science Act depends on how many fab facilities get built. The SK Hynix facility, for example, isn’t set to be completed until 2028. Meanwhile, workforce challenges and licensing issues have forced TSMC to delay the production dates for its newest facilities in Phoenix to 2027 or 2028.
Gupta said time will tell if the new facilities move the needle on U.S. chip manufacturing or keep production the same.
“At least it will prevent the needle from going in the opposite direction,” he said.
Challenges facing U.S. semiconductor manufacturing
Hiring a skilled workforce for the new fab facilities is a challenge, not just for TSMC, but for all chipmakers, Gupta noted. Additionally, these overseas-based companies face the task of navigating increased regulations and employee rules, which are less prevalent in countries like Taiwan.
“The entire chip manufacturing ecosystem moved over to Asia,” Gupta said, noting that these companies have little experience with U.S. regulations and the workforce. “It’s very different in the U.S.,” he added.
Forrester analyst Alvin Nguyen said he’d like to see more emphasis on education and training in the U.S. as an important facet of long-term support for semiconductor manufacturing.
Another difficult part of re-establishing the semiconductor supply chain in the U.S. is making it sustainable, Nguyen said. Superfund sites in California stemming from semiconductor design and manufacturing in the late 1990s demonstrate the dangers of chip manufacturing, something companies will have to consider, he said. A Superfund site is an area polluted by hazardous materials often related to manufacturing.
“There needs to be very smart decisions about where to locate these to provide protection and safety,” he said.
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
Wanda Parisien is a computing expert who navigates the vast landscape of hardware and software. With a focus on computer technology, software development, and industry trends, Wanda delivers informative content, tutorials, and analyses to keep readers updated on the latest in the world of computing.