The Biden Administration has moved to finalise a US$6.6 billion grant award to Taiwan Semiconductor Manufacturing Company (TSMC) for the construction of chip factories in Phoenix, Arizona, just two weeks after Donald Trump won the US Presidential election.

The grant is part of the CHIPS and Science Act, one of Biden’s core legislature objectives alongside the Inflation Reduction Act, which allocated US$52.7 billion to promote semiconductor research, manufacturing and sector development in the US.

Bringing manufacturing onshore

With semiconductors forming the bedrock of modern advanced technologies, access to them has become not only an economic but also a defence imperative.

The Biden Administration has initiated several programs to lock down strategic supplies of battery and critical minerals, semiconductors and advanced microchip technology.

“America invented the semiconductor, and used to produce nearly 40% of the world’s chips, but today, we produce only about 10% of global supply—and none of the most advanced chips,” the White House said in a 2022 statement.

Trump has already expressed his displeasure with the CHIPS act in an interview with podcaster Joe Rogan, stating “That CHIPS deal is so bad.”

He made similar comments to Bloomberg Businessweek, stating “Taiwan took our chip business from us. I mean, how stupid are we? They took all of our chip business. They’re immensely wealthy.”

A matter of national security

The TSMC grant is expected to create thousands of jobs on US soil while also strengthening the US position in the semiconductor supply chain at a time of increasing technological tensions with China.

“This is a gigantic announcement,” Secretary of Commerce Gina Raimondo told reporters Friday.

“This will be one of the most important investments that we make as a country to advance our economic and national security.”

The finalisation of the contract will mean the government – including the incoming administration – will be obligated to follow through.

“It’s a binding contract,” said Ryan Harper, the White House CHIPS implementation coordinator.

“The company, as long as it meets its milestones, has a contractual binding agreement from the government to move forward.”