Taiwan Semiconductor Secures $6.6 Billion in CHIPS Act Funding
However, the stock price fell due to the decline in the stock price.
taiwan semiconductor (NYSE:TSM) received $6.6 billion in grants through the CHIPS and Science Act on Friday.
This is the second major award in the bill to be finalized. The first major award went to Minneapolis-based Polar Semiconductor in September.
In total, the bill seeks to allocate $52.7 billion for semiconductor research, development and manufacturing.
Taiwan Semiconductor is the world’s largest semiconductor foundry company. As a foundry company, we simply manufacture semiconductors for other companies and do not design them. Clients include most major players, including Advanced Micro Devices (AMD), Apple, NVIDIA, and Qualcomm.
Taiwan Semiconductor currently holds about 60% of the foundry market share.
3 fabs planned for construction in Phoenix
The award is for TSMC Arizona, a subsidiary of Taiwan Semiconductor, to build three fabs, or manufacturing plants, in Phoenix as part of a planned $65 billion greenfield investment.
The Biden administration said this is the largest foreign direct investment in a greenfield project in U.S. history.
“TSMC’s first of three facilities is scheduled to fully open early next year. This means that for the first time in decades, U.S. manufacturing plants will produce cutting-edge chips used in cutting-edge technologies from smartphones to smartphones. “From self-driving cars to data centers powered by artificial intelligence,” President Joe Biden said in a press release.
The company will receive funds in stages based on TSMC meeting project milestones. The first $1 billion is expected to be disbursed by the end of this year, according to the report.
In addition to $6.6 billion in direct funding, the CHIPS Program Office will provide up to $5 billion in proposed loans to TSMC Arizona.
Once operating at full capacity, the three fabs located in Phoenix are expected to manufacture tens of millions of advanced chips that will power smartphones, self-driving cars, high-performance computing and AI applications. According to the report, the second fab is scheduled to open in 2028, and the third fab will be operational in 2030.
“TSMC is grateful for our continued collaboration with our customers, partners, communities and the U.S. government since early 2020,” said TSMC Chairman and CEO. “Signing this agreement helps accelerate the development of the most advanced semiconductor manufacturing technologies available in the United States.” Dr. CC Wei said:
stock price falls
The news didn’t move the stock higher. In fact, Taiwanese semiconductor stocks were down about 1.7% on Friday. It was a bad day for stocks Friday, as the Nasdaq was down about 500 points, or about 2.6%, as of 2 PM ET.
The S&P 500 fell 91 points, or 1.6%, and the Dow Jones Industrial Average fell about 360 points, or 0.8%. The Russell 2000 index fell about 34 points, or 1.5%.
Despite Friday’s decline, Taiwanese semiconductor stocks are up about 78% this year compared to last year, trading at about $185 per share. The median price target is $239 per share, implying a 29% increase, and the average P/E ratio is slightly above 30.
The company also raised its dividend to 69 cents per share, from 62 cents in the previous quarter, for a yield of about 1.23%.
