Lawmakers are deploying billions to boost America’s chip industry

And no, we’re not talking about potato chips (unfortunately). Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker, will receive up to $11.6 billion in US government subsidies and loans as part of a newly announced deal aimed at reversing a recent decline in America’s semiconductor industry.

The funds are earmarked for a trio of TSMC chip factories currently under construction in Phoenix. In exchange for the subsidies, the Taiwan-based company agreed to boost its total funding for the Phoenix project from $40 billion to $65+ billion, representing the largest foreign direct investment in a new project in US history.

• TSMC, which makes cutting-edge chips for tech giants like Apple and Nvidia, also agreed to develop its next-gen 2-nanometer chips at one of the three factories it plans to build in Phoenix.

The deal is part of US lawmakers’ attempt to bring chipmaking back to America. The funds for TSMC come from Congress’ bipartisan CHIPS and Science Act of 2022, which went full Team America, __ yeah, setting aside ~$53 billion worth of grants, research funding, and other perks aimed at reversing the semiconductor industry’s flight overseas in recent decades.

• Between 1990-2020, the US share of global chip manufacturing fell from 37% to 12%.
• Now, thanks to new projects, the US is on track to make ~20% of the world’s cutting-edge chips by 2030, per the Commerce Department. (Rumor has it that senators are singing the Team America song in the halls of Congress.)

Big picture: The TSMC funding is the third major round authorized under the Chips Act, following similar subsidies for contract chipmaker GlobalFoundries ($1.5 billion) and Intel ($8.5 billion).

👀 Looking ahead… Further large grants are expected for Micron, a memory manufacturer building a chip plant in New York, and Samsung Electronics, which is constructing a factory complex in Texas.