Biden Cements TSMC Grant Before Trump Takes Over

by · NY Times

Biden Cements TSMC Grant Before Trump Takes Over

The White House is racing to finish grant agreements for chip manufacturers, but some of its biggest successes might be credited to the Trump administration.

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President Biden at the Taiwan Semiconductor Manufacturing Company site in Phoenix in 2022. TSMC is expected to receive at least $1 billion by the end of the year, officials said.
Credit...Adriana Zehbrauskas for The New York Times

By Ana Swanson and Madeleine Ngo

Reporting from Washington

The Biden administration said on Friday that it had completed an agreement to award Taiwan Semiconductor Manufacturing Company up to $6.6 billion in grants, as federal officials race to put in place their plans to boost U.S. chip manufacturing before the end of President Biden’s term.

The administration struck a preliminary agreement in the spring to provide TSMC with the funding, which will support three new factories in Phoenix. The government will give TSMC the money in tranches as the company meets milestones.

In a statement, Mr. Biden said that the foreign direct investment in the facilities was the largest for a new factory project in U.S. history, and that the announcement on Friday was “among the most critical milestones yet” in the rollout of his chips program.

The agreement “demonstrates how we are ensuring that the progress made to date will continue to unfold in the coming years, benefiting communities all across the country,” Mr. Biden said.

The administration is expected to finish more grant awards in the coming weeks. But the projects might come too late for Mr. Biden to receive much credit. Chip factories take years to build, and many of these projects will not break ground — or produce chips — until well into President-elect Donald J. Trump’s term.

Mr. Biden’s administration is working to cement its legacy with the grants as part of a $39 billion program to revitalize U.S. technology manufacturing and reduce reliance on foreign nations for critical semiconductors. The program is a pillar of the president’s economic policy, which has largely focused on bolstering American manufacturing.

While the administration has struck several deals to award billions in funding, none of the money has yet gone out the door. That offers Mr. Trump another opportunity to claim credit as the dollars begin to flow and help create thousands of jobs across the country.

TSMC is only the second company, after Polar Semiconductor, to complete its agreement, even though most of the funding has been allocated. Some chip executives have expressed dismay at the slow pace.

The Biden administration argues that it has already had plenty of successes. It points to a sharp uptick in spending on U.S. factory construction, and says the United States will be the only major country to have all five leading chip manufacturers within its borders.

And while other chipmakers like Intel have struggled, Biden administration officials have pointed to TSMC as a success story. TSMC is expected to receive at least $1 billion before the end of the year, Commerce Department officials said.

The program is funded by the 2022 CHIPS and Science Act, a bipartisan effort to reverse decades of offshoring in the technology industry.

Only about 10 percent of the world’s semiconductors are produced in the United States, down from about 37 percent in 1990. And nearly all of the advanced chips used in the United States are made in Taiwan, an island that could be under threat of Chinese invasion.

TSMC will invest more than $65 billion of its own funding in the Arizona factories, which will make the type of advanced chips needed to create artificial intelligence and power sophisticated military equipment. The production quality at TSMC’s Arizona plants is on a par with similar factories in Taiwan, and TSMC has brought its most advanced chip technology to the United States, administration officials said.

In a call with reporters on Thursday, Gina M. Raimondo, the commerce secretary, called this “the most sought-after technology on the planet.”

“When we started implementing the CHIPS program, many, many people said it wasn’t possible,” she said. “‘TSMC wouldn’t expand at this scale in the United States.’ ‘If they did, they wouldn’t be able to match their quality and efficiency in the U.S. that they had in Taiwan.’ So to all of those naysayers, I say it’s happening.”

Mr. Trump has criticized the program. In October, he said the bipartisan law provided “billions of dollars for rich companies,” arguing that a stiff tariff on foreign chips would do the trick instead.

“You didn’t have to put up 10 cents,” Mr. Trump said on an episode of “The Joe Rogan Experience.” “You tariff it so high that they will come and build their chip companies for nothing.”

Mr. Trump’s opposition is a sharp turn from his first stint as president, when his administration worked to lure TSMC to the United States. Like the Biden administration, Trump officials were concerned about the country’s reliance on Taiwan for advanced chips and wanted to bring more production onto America’s shores. Trump officials negotiated with TSMC to build a plant in Arizona, and their effort to secure subsidies for the factories helped feed into a broader push for funding.

In an emailed statement, Senator Mark Kelly, Democrat of Arizona, said that “who gets credit isn’t important.”

“What’s important is what it means for Arizona and our national security,” he said. “Bringing microchip manufacturing back to America has always been and will continue to be a bipartisan effort.”

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