The world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), embarrassingly flush with obscene amounts of US government cash, just agreed to instantly make the United States of America the chipmaking superpower.
Armed with a new grant worth no less than $10.3 billion (US$6.6bn), TSMC has reportedly increases its US investment by more than 60% – or by more than $65bn – and produce the world’s most advanced 2-nanometer chips on American soil.
TSMC supplies its products to anything remotely in the Mega Tech/wannabe global chip developer space, be it Apple or Amazon, even main competitors Nvidia and Qualcomm.
That US$6.6bn direct funding to TSMC would be the US govt’s largest cash grant to a foreign chipmaker ever. Although, for the moment, TSMC produces its most advanced chips exclusively in Taiwan: the hallowed 4-nm chips for AI training, designed by Nvidia and used for applications such as ChatGPT.
TSMC is pretty much the global leader in semiconductor production and is by far the world’s top provider of leading-edge logic chips, used in emerging tech and artificial intelligence (AI).
The big announcement comes as brokers at US-based fundies KeyBanc hoist their price target on competitor Nvidia (NVDA) to US$1,200 a pop, up from US$1,100 and implying upside of more than a full third as per Monday morning in New York.
Nvidia’s GB200, which go for circa $US1.75m, are expected to be fully mainstream by next year, and KetBanc math reckons they could generate as much as $US140bn “in revenues in (and) of itself.”
NVDA stock is meteoric. Up circa 80% YTD.
Last year, NVDA stock soared more than 200%.
A global semi-superpower
TSMC’s pledge to expand in the States all but ensures the Americans will be on track to produce about 20% of the world’s cutting-edge computer chips by the end of the decade, 2030, the Commerce Department said in a press release.
The Commerce Secretary Gina Raimondo told local press that TSMC will also build a previously unannounced third chip factory in Arizona.
Raimondo reckons that’ll be churning out homemade chips in a little over five years.
“For the first time ever, we will be making, at scale, the most advanced semiconductor chips on the planet here in the United States of America,” Raimondo told reporters ahead of the Monday reveal.
The investment will be the largest foreign direct investment in American history for a greenfield project, as per the US gov’t.
Then of course, there’s the $5bn TSMC will also receive in loans and the final carrot: claiming a great big investment tax credit of up to 25% of any capex.
I’m tempted myself and I can only make French fries.
No less than 14 global suppliers will also construct supporting factories around Pheonix in Arizona or somewhere else in the States to help the TSMC chip-churning plants.
Almost three-quarters of all TSMC’s semiconductor customers are American corporates and they’ve already given a big thumbs up to the idea of buying American-made.
Cash coming in cheap as CHIPS
The 2022 Biden Admin’s CHIPS Act (and sciences) Act, is a very little off the table circa $US50bn fund aimed at fast-tracking homemade US chips in an attempt to slam the door on China chipmakers (it’s a national security thing, so there’s really, very little off the table).
It’ll be only the second-largest CHIPS grant, the No 1 with a bullet remains the near $US20bn in grants and loans foisted on Intel.
US President Joe Biden actually went to Arizona to celebrate those ones, so he’s got some travel ahead considering there’s still around $33bn to throw at the US semiconductor-making sector.
“This is our fifth CHIPS announcement. We’re on a roll, so we have more to come in the weeks ahead,” Raimondo told reporters
Samsung and SK Hynix are also throwing billions of industry investments across America and would likely be next out of towners to benefit from the overflowing munificence of Washington.
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