By Sherry Qin


Taiwan Semiconductor Manufacturing's shares jumped after news of it winning a $6.6 billion subsidy from the U.S. government to expand its investment in an Arizona complex as part of the Biden administration's efforts to boost advanced chip-making capabilities.

Shares of the world's largest contract chip maker and index heavyweight rose 4.6% to a new record of 819 New Taiwan dollars (US$25.53) on Tuesday, driving a 1.85% gain for Taiwan's Taiex index.

TSMC will invest more than $65 billion in total and add a third chip factory to the manufacturing complex in Arizona it started building in 2021, U.S. officials said Monday in a statement. TSMC will make cutting-edge 2-nanometer chips in the third fab by 2028, which would be three years later than in Taiwan.

Citi analysts said the U.S. facility could be one to two generations behind Taiwan-based fabs due to U.S. requirements and regulations.

The subsidy is "more than 30% higher than our original expectation," said Patrick Liao, a Taiwan tech analyst who publishes on the Smartkarma platform. Liao previously estimated that TSMC could receive around $5 billion through the Chips and Science Act after Intel got $8.5 billion under the act.

By granting subsidies to chip makers, "the US is aiming to bring together Intel, TSMC, and Samsung for chip manufacturing within US borders," Liao added.

The U.S. share of chip manufacturing fell to 12% in 2020 from 37% in 1990, exposing the U.S. to "significant economic and national security vulnerabilities," President Biden said in the statement.

"I was determined to turn that around," Biden added.

With projects such as TSMC's, the U.S. is on track to make about 20% of the world's cutting-edge chips by 2030, the Commerce Department said.

Through its U.S.-based fabs, TSMC can support customers including Apple, Nvidia and Qualcomm by "addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era," the Commerce Department said.

TSMC's decision to expand investment comes amid geopolitical tensions and competition from rivals like Intel and Samsung, said Arisa Liu, semiconductor research director at the Taiwan Institute of Economic Research.

While TSMC's Japanese chip project has progressed, its fabs in Arizona have been plagued by delays since they were first announced in 2021. "The pressure on the goal of manufacturing chips in the U.S. has obviously increased," Liu said.

Meanwhile, both Intel and Samsung have been spending more on building and expanding fabs in the U.S.

However, TSMC will remain the "undisputed leader" in cutting-edge semiconductor manufacturing over Intel due to its technological lead and economies of scale, Citi analysts said.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

04-09-24 0348ET