Just before the end of Biden’s term, Taiwan Semiconductor raises $6.6 billion in U.S. funding to build advanced chip factory – Taiwan Semiconductor (NYSE:TSM)

The United States has agreed to provide up to $6.6 billion in direct funding to Taiwan Semiconductor Manufacturing Company. TSM Build an advanced chip facility in the US

The agreement is aimed at boosting domestic semiconductor production and strengthening national security by reducing dependence on foreign suppliers, Barron’s reported.

The Biden administration announced that Taiwan Semiconductor’s investment will raise $65 billion in private capital to establish three state-of-the-art factories in Arizona.

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The announcement was made just before President-elect Donald Trump was inaugurated. President Trump has previously attacked Taiwan and criticized U.S. chip laws for undermining the U.S. chip industry.

Taiwan Semiconductor’s first facility will focus on producing cutting-edge logic chips and is expected to be operational by early 2025. These chips power next-generation technologies such as 5G/6G smartphones, self-driving cars, and AI applications.

Initial production at the Arizona facility is reportedly showing high initial yields, comparable to the quality at Taiwan Semiconductor’s facility in Taiwan.

Commerce Secretary Gina Raimondo spoke to Barron’s about the importance of domestically manufacturing these advanced chips, highlighting their role in AI, quantum computing, and military hardware.

This initiative aims to reduce risks associated with foreign supply chains and address critical national security concerns by producing these chips on U.S. soil.

In addition to direct funding, the US government is expanding a proposed loan of up to $5 billion to support Taiwan Semiconductor’s Arizona project.

This investment has the potential to create approximately 6,000 direct manufacturing jobs. A senior US official told Barron’s that at least $1 billion of the allocated funds could be distributed to Taiwan Semiconductor this year, subject to certain milestones being achieved.

Meanwhile, Taiwan Semiconductor continues to focus on strengthening its outer moat while diversifying its base beyond Taiwan as governments around the world provide attractive subsidies.

The contract chip manufacturer is increasing its use of extreme ultraviolet (EUV) lithography systems, an essential technology for semiconductor manufacturing, even at great expense.

EUV machines cost more than $100 million each, making them one of the chip manufacturing sector’s most expensive assets.

Industry analysts suggest that TSMC has significantly increased its EUV production capacity, increasing its share of global EUV equipment from 50% in 2020 to 56% by 2023.

In Asia, Japan has also earmarked more than $64.9 billion to strengthen its semiconductor and AI sectors. Taiwan Semiconductor is considering investing $13.5 billion to build a second facility in the Kumamoto area, following its first $8.6 billion wafer fab in Japan’s Kumamoto area.

Additionally, the company plans to establish a third advanced chip factory in Kumamoto, worth $20 billion, to produce 3-nanometer chips.

Taiwan Semiconductor’s stock price has risen 86% since the beginning of the year.

Price Action: TSM stock was down 1.21% at $186.23 at last check on Friday.

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