The US Department of Commerce and TSMC Arizona Corporation (TSMC Arizona), a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC), have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $6.6 billion in direct funding under the CHIPS and Science Act. This proposed funding would support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors.

In addition to the proposed direct funding of up to $6.6 billion, the CHIPS Program Office would make approximately $5 billion of proposed loans—which is part of the $75 billion in loan authority provided by the CHIPS and Science Act—available to TSMC Arizona under the PMT. The company has indicated that it is planning to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.

With total capital expenditures of more than $65 billion, TSMC Arizona’s investment is the largest foreign direct investment in a greenfield project in US history.

After initially announcing two fabs in the US, TSMC Arizona is committing to build an additional third fab before the end of the decade. With this proposed funding, TSMC Arizona would be ensuring the formation of a scaled leading-edge cluster in Arizona, creating approximately 6,000 direct manufacturing jobs, more than 20,000 accumulated unique construction jobs, and tens of thousands of indirect jobs in this decade and bringing the most advanced process technology to the United States.

TSMC is widely recognized as a global leader in semiconductor manufacturing, having pioneered the pure-play foundry business model in 1987, and now manufactures more than 90% of the world’s leading-edge logic chips.

In Arizona, TSMC’s three fabs are expected to bring a suite of the most advanced process node technologies to the United States: the first fab will produce 4nm FinFET process technologies; the second fab will produce the world’s most advanced 2nm nanosheet process technology, in addition to previously announced plans to produce 3nm process technologies; and TSMC Arizona’s third fab will produce 2nm or more advanced process technologies depending on customer demand.

At full capacity, TSMC Arizona’s three fabs would manufacture tens of millions of leading-edge chips that will power products such as 5G/6G smartphones, autonomous vehicles, and AI datacenter servers. TSMC Arizona expects to begin high-volume production in their first fab in the US by the first half of 2025.

TSMC Arizona’s investment in the United States is catalyzing meaningful investment across the supply chain, including from 14 direct suppliers that plan to construct or expand plants in Arizona or other parts of the US, further strengthening US domestic supply chain resilience.

TSMC’s advanced chips are the backbone of CPUs for servers in large-scale datacenters and of specialized graphic processing units (GPUs) used for machine learning. Through the proposed funding for TSMC Arizona, the United States would onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques.

Furthermore, through its Arizona fabs, TSMC will be able to better support its key customers, including US companies AMD, Apple, Nvidia, and Qualcomm, among others, by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era.

With the proposed incentives, TSMC Arizona has also committed to support the development of advanced packaging capabilities—the next frontier of technology innovation for chip manufacturing—through its partners in the US, creating the opportunity for TSMC Arizona’s customers to be able to purchase advanced chips that are made entirely in the US.

The PMT also proposes $50 million in dedicated funding to develop the company’s semiconductor and construction workforce. To build the long-term construction workforce needed to support these projects, TSMC Arizona recently signed an agreement with the Arizona Building and Construction Trades Council. The company also plans to utilize registered apprenticeship programs to meet a 15% apprenticeship utilization rate on the Phoenix construction site.