TSMC is set to receive $11.6 billion from the US government under the CHIPS and Science Act.

The funding package is made up of $6.6bn in grants and an additional $5bn in loans.

TSMC Fab 16
TSMC Fab 16, Jiangsu Province, China – Taiwan Semiconductor Manufacturing Co., Ltd

Under the terms of the agreement, TSMC will also construct a third factory in Phoenix, Arizona. The chip manufacturer is already constructing two plants in the state that will produce 4nm and 3nm semiconductors.

According to a statement from the US Department of Commerce, the third, newly announced TSMC fab will produce 2nm or “more advanced process technologies depending on customer demand” and is expected to be in production by the end of the decade.

The addition of this third facility will bring the company’s total investment in Arizona to $65bn, with the project expected to create approximately 6,000 direct manufacturing jobs, more than 20,000 construction jobs, and tens of thousands of indirect jobs.

“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC chairman, Mark Liu.

“Our US operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our US operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

Construction of TSMC’s two previously announced fabs in Arizona had been repeatedly plagued by delays, with the company citing issues around sourcing the necessary talent and pushing the production timeline for its 4nm fab to 2025 and its 3nm fab to 2027.

However, earlier this month, several weeks after it was first reported that US federal grants for the company were being finalized, TSMC reversed its messaging and announced that construction at its fab was ahead of schedule. According to reports, Pilot production operations are now expected by mid-April, with the preparations for mass production to be completed by the end of the year.

It is unclear whether both fabs or just the 4nm facility are now due to be in production ahead of schedule.

In February 2024, GlobalFoundries was awarded $1.5 billion by the US government under the act to subsidize the company’s future semiconductor production capabilities and support expansion plans for its New York and Vermont sites.

In March, Intel was awarded $8.5 billion in direct funding, $11bn in low-interest rate loans, and a 25 percent investment tax credit on up to $100 billion of Intel’s capital investments under the Act. It will be used to support the company’s investments in Arizona, New Mexico, Ohio, and Oregon where the company is expanding its chipmaking facilities.