TSMC Wins $6.6 billion US Subsidy for Arizona Chip Production

A logo of taiwanese chip giant TSMC is seen at southern Taiwan science park in Tainan, Taiwan December 29, 2022.REUTERS/Ann Wang/File Photo Purchase Licensing Rights
A logo of taiwanese chip giant TSMC is seen at southern Taiwan science park in Tainan, Taiwan December 29, 2022.REUTERS/Ann Wang/File Photo Purchase Licensing Rights
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TSMC Wins $6.6 billion US Subsidy for Arizona Chip Production

A logo of taiwanese chip giant TSMC is seen at southern Taiwan science park in Tainan, Taiwan December 29, 2022.REUTERS/Ann Wang/File Photo Purchase Licensing Rights
A logo of taiwanese chip giant TSMC is seen at southern Taiwan science park in Tainan, Taiwan December 29, 2022.REUTERS/Ann Wang/File Photo Purchase Licensing Rights

The US Commerce Department said Monday it would award Taiwan Semiconductor Manufacturing Co's (TSMC) (2330.TW), opens new tab US unit a $6.6 billion subsidy for advanced semiconductor production in Phoenix, Arizona and up to $5 billion in low-cost government loans.

TSMC agreed to expand its planned investment by $25 billion to $65 billion and to add a third Arizona fab by 2030, Commerce said in announcing the preliminary award. The Taiwanese company will produce the world's most advanced 2 nanometer technology at its second Arizona fab expected to begin production in 2028, the department said, Reuters reported.

"These are the chips that underpin all artificial intelligence, and they are the chips that are necessary components for the technologies that we need to underpin our economy, but frankly, a 21st century military and national security apparatus," Commerce Secretary Gina Raimondo said in a statement.

TSMC, the world's largest contract chipmaker and a major supplier to Apple (AAPL.O), opens new tab and Nvidia (NVDA.O), opens new tab, had previously announced plans to invest $40 billion in Arizona. TSMC expects to begin high-volume production in its first US fab there by the first half of 2025, Commerce said.

The $65 billion-plus investment by TSMC is the largest foreign direct investment in a completely new project in US history, the department said.

Congress in 2022 approved the Chips and Science Act to boost domestic semiconductor output with $52.7 billion in research and manufacturing subsidies. Lawmakers also approved $75 billion in government loan authority.

TSMC Arizona has also committed to support the development of advanced packaging capabilities through partners in the US to allow customers to purchase advanced chips that are made entirely on US soil, the department said, adding 70% of TSMC customers were US companies.

TSMC CEO C.C. Wei said the company would help US tech firms "unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona."

Commerce expects the projects will create 6,000 direct manufacturing jobs and 20,000 construction jobs. The department said 14 direct TSMC suppliers plan to construct or expand US plants.

At full capacity, TSMC's three fabs in Arizona will manufacture tens of millions of leading-edge chips in 5G/6G smartphones, autonomous vehicles, and AI data center servers, the department said.

Through its Arizona fabs, TSMC will support key customers like Apple, Nvidia, Advanced Micro Devices (AMD.O), opens new tab and Qualcomm (QCOM.O), opens new tab "by addressing their leading-edge capacity demand, mitigating supply chain concerns, and enabling them to compete effectively in the ongoing digital transformation era," the department added.

Commerce last month announced $8.5 billion in grants and up to $11 billion in loans for Intel (INTC.O), opens new tab to subsidize leading-edge chip production from the same program.

The department is expected to unveil an award for South Korea's Samsung Electronics (005930.KS), opens new tab as soon as next week, sources said. Commerce declined to comment. Samsung did not respond immediately to a request for comment.



Oil Bounces as Ukraine Ceasefire Deal Remains Elusive 

An oil tank and an oil pumpjack are pictured in the Permian basin, Loco Hills regions, New Mexico, US, April 6, 2023. (Reuters)
An oil tank and an oil pumpjack are pictured in the Permian basin, Loco Hills regions, New Mexico, US, April 6, 2023. (Reuters)
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Oil Bounces as Ukraine Ceasefire Deal Remains Elusive 

An oil tank and an oil pumpjack are pictured in the Permian basin, Loco Hills regions, New Mexico, US, April 6, 2023. (Reuters)
An oil tank and an oil pumpjack are pictured in the Permian basin, Loco Hills regions, New Mexico, US, April 6, 2023. (Reuters)

Oil prices rebounded on Friday to recover some of their more than 1% losses in the previous session, partly due to diminishing prospects of a quick end to the Ukraine war that could bring back more Russian energy supplies.

Brent crude futures rose 46 cents, or 0.7%, to $70.34 a barrel by 0406 GMT after settling 1.5% lower in the previous session. US West Texas Intermediate crude was at $67.03 a barrel, up 48 cents, or 0.7%, after closing down 1.7% on Thursday.

Russian President Vladimir Putin said on Thursday that Moscow supported a US proposal for a ceasefire in Ukraine in principle, but sought a number of clarifications and conditions that appeared to rule out a quick end to the fighting.

"Russia's tepid support of a 30-day ceasefire proposal with Ukraine has reduced confidence around a ceasefire in the short term," IG market analyst Tony Sycamore said.

"The feeling is that US won't lift sanctions until they agree a ceasefire."

However, the global trade war that has roiled financial markets and raised recession fears is escalating with US President Donald Trump on Thursday threatening to slap a 200% tariff on alcohol imports from Europe.

The International Energy Agency warned on Thursday that global oil supply could exceed demand by around 600,000 barrels per day this year, due to growth led by the United States and weaker than expected global demand.

"The macroeconomic conditions that underpin our oil demand projections deteriorated over the past month as trade tensions escalated between the US and several other countries," the IEA said, prompting it to revise down its demand growth estimates for the fourth quarter of 2024 and the first quarter of 2025.

The Trump-driven trade war woes and demand worries dented oil prices on the previous day, though the possibility of less Russian oil in the global markets in the near term provided some cushion during Friday's trade.

"Most price projections were to the downside in the short term, but geopolitical tension could still cause supply disruptions," ANZ analysts said in a note to clients.