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TSMC Secures Subsidies for Expanding Chip Manufacturing in Arizona

TSMC Secures Subsidies for Expanding Chip Manufacturing
FILE PHOTO: The logo of Taiwan Semiconductor Manufacturing Co (TSMC) is pictured at its headquarters... FILE PHOTO: The logo of Taiwan Semiconductor Manufacturing Co (TSMC) is pictured at its headquarters, in Hsinchu, Taiwan, Jan. 19, 2021. Photo Credit: Ann Wang
TSMC Secures Subsidies for Expanding Chip Manufacturing
FILE PHOTO: The logo of Taiwan Semiconductor Manufacturing Co (TSMC) is pictured at its headquarters... FILE PHOTO: The logo of Taiwan Semiconductor Manufacturing Co (TSMC) is pictured at its headquarters, in Hsinchu, Taiwan, Jan. 19, 2021. Photo Credit: Ann Wang

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TSMC Secures Subsidies for Expanding Chip Manufacturing in Arizona

Taiwan Semiconductor Manufacturing Company (TSMC) has made a significant move to bolster semiconductor production in the United States, agreeing to construct a third factory in Arizona. This expansion increases TSMC’s total investment in the US to a staggering $65 billion, with substantial financial backing from the US government, including subsidies and potential loans totaling $11.6 billion.

The endeavor reflects a concerted effort by the US to reduce its reliance on Asian semiconductor suppliers, particularly Taiwan, amid escalating tensions with China and concerns over economic and national security vulnerabilities. In recent years, the US government has implemented measures to incentivize domestic semiconductor manufacturing, with the approval of over $50 billion in grants dedicated to industry development and research.

The significance of TSMC’s expansion extends beyond economic considerations, as emphasized by Laurie Locascio, Under Secretary of Commerce for Standards and Technology. She views the investment as an “inflection point” that will not only bolster the nation’s technological leadership but also reinforce its position in the global digital economy.

TSMC, renowned as the world’s largest semiconductor manufacturer and a key supplier to tech giant Apple, previously announced plans for its first US factory in 2020, scheduled to commence operations next year. The newly announced third facility is slated to open by the end of the decade, contributing to job creation with thousands of direct high-tech positions and tens of thousands of indirect jobs.

Despite the ambitious investment, TSMC has encountered challenges, including delays attributed to labor shortages and uncertainties surrounding US government incentives. These hurdles underscore the complexities involved in reshoring semiconductor production and highlight the need for sustained efforts to address workforce issues and regulatory concerns.

The announcement coincides with US Treasury Secretary Janet Yellen’s visit to China, aimed at mitigating tensions between the two economic powerhouses. While Yellen has expressed optimism about the relationship’s progress, underlying concerns persist regarding divergent economic policies and trade practices.

Both countries seek to manage perceptions and project stability in their relationship, yet fundamental disagreements persist regarding economic strategies and global governance. The outcome of Yellen’s discussions is unlikely to fundamentally alter the entrenched perceptions and strategic interests driving US-China relations. As former US trade negotiator Stephen Olson observes, the core perceptions of mutual distrust and competition are deeply ingrained and likely to persist despite diplomatic engagements.


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