Biden Secures $6.6 Billion Semiconductor Deal with TSMC to Bolster U.S. Chip Manufacturing

President Joe Biden’s administration has finalized a groundbreaking deal with Taiwan Semiconductor Manufacturing Company (TSMC) to build three state-of-the-art semiconductor plants in Arizona. The $6.6 billion agreement, part of the broader CHIPS and Science Act, is set to create thousands of new jobs in the Phoenix area and strengthen the U.S. position in the global semiconductor market.

Semiconductors are crucial to modern life, powering everything from smartphones to cars and military equipment. With this deal, Biden is aiming to reduce the U.S.’s reliance on foreign chipmakers and boost the country’s manufacturing capabilities in this vital sector.

A Major Boost for U.S. Tech and Security

The TSMC investment is a direct result of the CHIPS and Science Act, which Biden signed into law in 2022. The law allocates $52.7 billion to support semiconductor research, production, and workforce development in the United States. This new agreement, which includes $6.6 billion in grants and an additional $5 billion in loans for TSMC, is a significant step toward achieving the Act’s goals.

TSMC, known for producing chips for major companies like Apple, AMD, and NVIDIA, will play a key role in strengthening the U.S. supply chain. Secretary of Commerce Gina Raimondo emphasized the importance of the deal, stating it represents one of the country’s most vital investments for both economic growth and national security.

Political Debate and Opposition to the CHIPS Act

Despite the deal’s significance, the CHIPS Act has been met with opposition from some Republican leaders. Former President Donald Trump has criticized the bill, arguing that it mainly benefits large corporations. In a recent interview, Trump suggested that imposing tariffs would be a better approach to bringing manufacturing jobs back to the U.S., though experts warn that tariffs could raise costs for consumers.

House Speaker Mike Johnson also expressed early skepticism, suggesting that Republicans might attempt to repeal the CHIPS Act. However, after the Act’s success in securing a $100 billion chip factory in his home state of New York, Johnson was forced to backtrack, acknowledging the benefits of the bill in job creation and investment.

A Binding Agreement with Long-Term Impact

The Arizona deal is not just symbolic—it is legally binding. According to Ryan Harper, the White House’s CHIPS implementation coordinator, as long as TSMC meets its agreed-upon milestones, the U.S. government is committed to following through with its financial support. This makes it unlikely that any future administration could reverse the deal.

“This is a binding contract,” Harper said. “It’s very difficult, if not impossible, for future administrations to undo the progress made under the CHIPS Act.”

This provision is crucial given the political back-and-forth surrounding the CHIPS Act. The deal’s finalization ensures that semiconductor production in Arizona will proceed, regardless of the changing political landscape.

Avoiding Past Mistakes: Lessons from Foxconn’s Failure

The TSMC deal also serves as a reminder of the past, particularly the failed Foxconn project in Wisconsin. Trump and former Governor Scott Walker had championed the Foxconn initiative, which promised thousands of jobs and significant investment. However, the project fell far short of expectations. Foxconn scaled back its factory plans, and the factory now employs a fraction of the promised workforce, despite over $4.5 billion in taxpayer subsidies.

Unlike the Foxconn deal, which left Wisconsin with little to show for its investment, the TSMC agreement is seen as a more solid bet for long-term growth and job creation in Arizona.

With this historic deal, Biden has positioned himself to leave office with a key achievement in the CHIPS Act. If successful, the TSMC plants will contribute to the growth of a robust domestic semiconductor industry, enhancing both the U.S. economy and national security.