“We have to be tough with companies,” Gina Raimondo said in remarks at the Centre for Strategic and International Studies, a Washington-based think tank. “Our tough negotiations with individual companies will result in each one of them doing more for economic and national security at a lower cost to the taxpayer.”

Stressing there was a “finite amount of money to meet our urgent national security goals”, Raimondo noted leading chip makers had requested about US$70 billion in federal funding.

American semiconductor production dropped from 37 per cent in 1990 to just 12 per cent last year owing to significant manufacturing cost differences between the US and other countries like China. No advanced chips are made stateside.

TSMC is building two advanced chip fabrication plants in the US state of Arizona at a total investment of US$40 billion. But the project has encountered delays partly because of a shortage of specialist workers.

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Last month TSMC was reported to have held discussions with the US government on the volume of federal incentives it would be receiving.

TSMC and Samsung Electronics are likely to get Chips Act funds for their new factories in the US, and the announcements could come during Biden’s State of the Union address on March 7, according to media reports.

Raimondo on Monday said she was “confident” that American-made leading-edge chips would “go from zero to 20 per cent” of global production by 2030.

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Under the end-of-decade goal, companies with longer-term project proposals would be left out of federal incentives related to the Chips and Science Act, she added.

In recent months, the US government has shifted its focus from advanced chips to the lesser-known legacy chips, concerned that Chinese subsidies of cheap chips are flooding the global market.

New US chip factories are rising but billions in federal funds have yet to flow

Raimondo said the Chips and Science Act required the government to invest a minimum of US$2 billion in legacy chips, contending “we’ll certainly exceed the US$2 billion statute”.

“I do feel we can do both. We can do … leading-edge logic, leading-edge memory and current/mature [chips] and still have some for the supply chain,” she added.

Not every dollar the US government would spend was meant solely to incentivise big chip makers, Raimondo said. Rather, the money was meant to “invest in the rest of the ecosystem”.