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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
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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.

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Business

Saudi Arabia Encourages Companies to Import Lebanese Products After Royal Order

Saudi Ambassador to Beirut Fahd Al-Dosari and officials from both countries at Beirut port at the launch of Lebanese exports to Saudi Arabia. (SPA)
Saudi Ambassador to Beirut Fahd Al-Dosari and officials from both countries at Beirut port at the launch of Lebanese exports to Saudi Arabia. (SPA)
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Saudi Arabia Encourages Companies to Import Lebanese Products After Royal Order

Saudi Ambassador to Beirut Fahd Al-Dosari and officials from both countries at Beirut port at the launch of Lebanese exports to Saudi Arabia. (SPA)
Saudi Ambassador to Beirut Fahd Al-Dosari and officials from both countries at Beirut port at the launch of Lebanese exports to Saudi Arabia. (SPA)

Saudi Arabia has officially begun encouraging its private sector to import Lebanese goods, a concrete step to revive trade between the two countries after years of disruption.

The step implements directives from Prince Mohammed bin Salman, Crown Prince and Prime Minister, and follows a request from Lebanon’s presidency and government.

Beirut port recently saw the first shipment leave for the Kingdom, in a ceremony officials said marked the rebuilding of economic trust, backed by modern and strict security controls to safeguard exports.

According to information obtained by Asharq Al-Awsat, Saudi Arabia’s General Authority of Foreign Trade informed the Federation of Saudi Chambers that a royal order had approved the resumption of Lebanese exports to the Kingdom.

It asked that the decision be circulated across the private sector so companies could benefit from it.

The move is expected to spur Saudi companies to tap the Lebanese market and push trade between the two countries toward broader horizons in line with their ambitions.

First export shipment

Acting on the Saudi royal order, Lebanese products were shipped again to Saudi Arabia on June 20, in the presence of the Saudi Ambassador to Lebanon, Fahd Al-Dosari. The shipment carried more than goods and merchandise.

It carried “a message of trust rebuilt after years of disruption, and an economic opportunity Lebanon eagerly awaits at a time when the need to stimulate production and increase exports is growing.”

The return of the Saudi market, which alone represents about 85% of the Gulf market, is not only a recovery of what was lost when exports stood at about $378 million before the ban. It also opens the door to greater ambitions to expand Lebanon’s presence in this vast market.

Al-Dosari said in a speech: “In implementation of the directives of Crown Prince Mohammed bin Salman to resume Lebanese exports to the Kingdom, and in response to the request of Lebanese President General Joseph Aoun and Prime Minister Nawaf Salam, and in line with the positive steps taken by the government toward rebuilding state institutions and the work completed by the specialized teams, we gather today to witness the departure of the first exports bound for Jeddah Islamic Port through Beirut port.”

He added: “As an embodiment of brotherly relations and out of the Kingdom’s keenness to stand by its brothers, this decision to resume Lebanese exports to the Kingdom confirms beyond doubt its support for Lebanon’s stability, its sovereignty over all its territory and the welfare of its brotherly people.”

Security screening

Prime Minister Nawaf Salam said Lebanon would not be allowed to again become “a launchpad for any harm against its Arab brothers,” and thanked Crown Prince Mohammed for lifting the ban on Lebanese exports.

The attendees then inspected modern scanning devices recently installed at Beirut port to examine goods and containers with precision. The equipment is designed to tighten security controls and speed up customs clearance.

Saudi Arabia had been Lebanon’s top export market before the ban. In 2014 and 2015, it ranked first, accounting for about 12% of Lebanon’s total exports, with a value of around $378 million in 2014, according to Lebanese customs and Chamber of Commerce data.

Bilateral trade was estimated at hundreds of millions of dollars annually.

Business

Türkiye and Iraq Discuss Energy Cooperation Ahead of Pipeline Deal Expiry

A general view of Türkiye's Mediterranean port of Ceyhan, Adana, southern Türkiye, Feb. 19, 2014. (Reuters)
A general view of Türkiye's Mediterranean port of Ceyhan, Adana, southern Türkiye, Feb. 19, 2014. (Reuters)
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Türkiye and Iraq Discuss Energy Cooperation Ahead of Pipeline Deal Expiry

A general view of Türkiye's Mediterranean port of Ceyhan, Adana, southern Türkiye, Feb. 19, 2014. (Reuters)
A general view of Türkiye's Mediterranean port of Ceyhan, Adana, southern Türkiye, Feb. 19, 2014. (Reuters)

Türkiye's ‌Energy Minister Alparslan Bayraktar said on Wednesday that he met senior Iraqi oil and foreign ministry officials to discuss energy cooperation, including on the Iraq-Türkiye Crude Oil Pipeline that runs from Kirkuk to Ceyhan.

The decades-old Türkiye-Iraq Crude Oil ‌Pipeline Agreement, which governs ‌exports through the ‌pipeline, ⁠is due to ⁠expire on July 27. Baghdad and Ankara are still discussing a new draft agreement.

The Iraqi delegation included Deputy Foreign Minister Hussein Bahr Al-Uloom, Deputy ⁠Oil Minister Naser Azez ‌Jabbar, and ‌Iraq's Ambassador to Ankara Majid Al-Lachmawi.

Bayraktar said in a ‌post on X that Türkiye aims to work closely with the new Iraqi government on more effective ‌use of existing energy infrastructure.

Türkiye also seeks to ⁠support ⁠existing infrastructure with new connections, Bayraktar said.

Baghdad last month asked Ankara to extend the pipeline agreement for at least a year to allow time for more talks, but Ankara said it does not want an extension under current conditions.

Business

Gold Falls as Higher Treasury Yields, Fed Rate Hike Bets Weigh

Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)
Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)
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Gold Falls as Higher Treasury Yields, Fed Rate Hike Bets Weigh

Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)
Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)

Gold fell for a third consecutive session on Wednesday, as rising US Treasury yields and growing bets that the Federal Reserve will raise interest rates pressured the non-yielding metal.

Spot gold was down 0.8% at $3,974.75 per ounce as of 0849 GMT, after touching its lowest level since last November at $3,942.99 in the previous session. US gold futures for August delivery lost 1.3% to $3,987.70/oz.

The yellow metal ‌on Tuesday recorded ‌its first quarterly loss since January 2024, Reuters reported.

A selloff ‌in ⁠US Treasuries on ⁠Tuesday pushed the benchmark 10-year yield up as much as 9 basis points before it backed off the highs. By Wednesday, yields were rising again, up 4 bps at 4.465%, outpacing increases in euro zone bond yields.

A stronger US dollar makes bullion less affordable for overseas buyers.

"The weakness is a bit driven by comments from ⁠Fed's Hammack, suggesting a rate hike might be ‌needed and market participants pricing in ‌a bit more rate hikes for this year," said UBS analyst Giovanni Staunovo. Federal ‌Reserve Bank of Cleveland President Beth Hammack said on Tuesday ‌she may advocate for higher rates if inflation pressures don’t moderate. According to CME FedWatch tool, traders see a nearly 67% chance of a rate hike by September.

Expectations for more hikes are not helping investment demand, and ‌ETF holdings have seen renewed outflows in recent days, said Staunovo, noting that price volatility is ⁠expected around economic ⁠data releases this week.

June ADP employment data, due at 1215 GMT, and Thursday's nonfarm payrolls report could give further clues on the Fed's policy path.

Markets will also closely watch the European Central Bank's annual Sintra conference on Wednesday, where Fed Chair Kevin Warsh and ECB President Christine Lagarde are due to speak. On the geopolitical front, concerns persisted over the prospects for US-Iran diplomacy after Tehran said it would not meet senior US envoys who travelled to the region following the recent outbreak of hostilities.

Spot silver fell 1.4% to $57.75 per ounce.

Platinum slipped 0.6% to $1,542.70, after hitting its lowest point since November. Palladium slid 1.4% to $1,187.01.