Semiconductor Manufacturing Boost: Biden Finalizes CHIPS Act Deals

Highlights   

• US allocates $6.6 billion grant for semiconductor manufacturing in Arizona.   
• Taiwan Semiconductor Manufacturing Company (TSMC) to build advanced chip factories.  
• Strategic move enhances national security and strengthens US chip supply chain.  

 The Biden Administration has secured a $6.6 billion grant under the CHIPS and Science Act to bolster the semiconductor manufacturing sector in the United States. The deal, finalized with Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE:TSM), will fund the development of advanced chip factories in Phoenix, Arizona. This initiative is part of a broader strategy to strengthen domestic production capabilities and reduce reliance on foreign supply chains.   

The CHIPS Act is a key legislative measure aimed at revitalizing the semiconductor industry. It allocates $52.7 billion to support semiconductor research, manufacturing, and related sector development within the US. This funding aligns with the administration’s goal of increasing production of advanced microchips, essential for modern technologies and national security.   

Revitalizing America’s Semiconductor Leadership   

The CHIPS Act addresses the decline of US semiconductor manufacturing over recent decades. Historically, the US produced nearly 40% of the world’s chips but now accounts for only around 10%, with none of the most advanced chips being domestically produced. This shift has created vulnerabilities in supply chains, particularly during periods of heightened geopolitical tensions.   

The Biden Administration emphasizes the importance of this initiative as a national security priority. Semiconductors are fundamental to technologies ranging from consumer electronics to defense systems, making their availability critical to economic stability and defense readiness.   

Strategic Impacts of the Deal   

The construction of TSMC’s advanced chip factories is expected to generate significant employment opportunities and fortify the US semiconductor supply chain. Secretary of Commerce Gina Raimondo highlighted the strategic importance of the deal, calling it one of the most significant investments for advancing both economic and national security.   

This binding agreement ensures that the incoming administration will uphold the contract, provided TSMC meets the stipulated milestones. According to Ryan Harper, White House CHIPS implementation coordinator, the commitment secures the project's continuity and long-term impact on the US semiconductor industry.   

The move underscores America’s determination to reclaim its leadership in semiconductor innovation while addressing critical supply chain vulnerabilities. As tensions rise in the global technology race, the deal positions the US to navigate future challenges with a stronger domestic production base.