The U.S. government has awarded Taiwan Semiconductor Manufacturing (TSM) $6.6 billion for a new production plant in Phoenix, Arizona.
The funding will come from the CHIPS and Science Act of 2022, which aims to make the United States self-sufficient in manufacturing microchips and processors. Earlier this year, the company, known as TSMC, agreed to expand its U.S. investment plans by up to $65 billion and pledged to add a third manufacturing plant in Arizona by 2030.
The Taiwanese company’s Arizona manufacturing center is scheduled to begin production in 2028. TSMC also agreed to use its cutting-edge chip manufacturing technology, called A16, in the United States. The award to TSMC also includes up to $5 billion in low-cost government financing.
Promoting U.S. semiconductor manufacturing
TSMC said in a written statement that the funding from the U.S. government will “help accelerate the development of the most advanced semiconductor manufacturing technology available in the United States.” The U.S. Congress approved the CHIPS Act in 2022, which aims to expand domestic semiconductor production and reduce semiconductor output. America is dependent on foreign microchip producers.
So far, the US government has allocated $36 billion to various microchip projects, including $8.5 billion for Intel (INTC) and $6.1 billion for Micron Technology (MU). TSMC stock is up 80% so far in 2024 as demand for TSMC’s processor manufacturing increases around the world.
Is TSM stock a buy?
Taiwan Semiconductor Manufacturing Co.’s stock has a consensus rating of “Strong Buy” among five Wall Street analysts. This rating is based on 5 purchase recommendations made in the last 3 months. The stock does not have a hold or sell rating. TSM’s average price target of $205 implies an upside of 10.29% from current levels.
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