The U.S. government has awarded $6.6 billion to Taiwan Semiconductor Manufacturing Co. (TSM) for a new production plant located in Phoenix, Arizona.
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The funding comes from the CHIPS and Science Act (CHIPS Act) that was created in 2022 and aims to make America self-sufficient in the manufacturing of microchips and processors. Earlier this year, TSMC, as the company is known, agreed to expand its planned investment in the U.S. by up to $65 billion and pledged to add a third Arizona fabrication plant by 2030.
The Taiwanese company’s Arizona manufacturing center is expected to begin production in 2028. TSMC has also agreed to use its most advanced chip manufacturing technology, called A16, in the U.S. The award to TSMC also includes up to $5 billion in low-cost government loans.
Boosting U.S. Semiconductor Manufacturing
In a written statement, TSMC said that the funding from the U.S. government, “Helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S.” The U.S. Congress in 2022 approved the CHIPS Act to boost domestic semiconductor production and lessen America’s reliance on foreign microchip producers.
So far, the U.S. government has allocated $36 billion to various microchip projects, including $8.5 billion for Intel (INTC) and $6.1 billion for Micron Technology (MU). The stock of TSMC has risen 80% so far in 2024 as demand for its processor manufacturing increases worldwide.
Is TSM Stock a Buy?
The stock of Taiwan Semiconductor Manufacturing Co. has a consensus Strong Buy rating among five Wall Street analysts. That rating is based on five Buy recommendations made in the last three months. There are no Hold or Sell ratings on the stock. The average TSM price target of $205 implies 10.29% upside from current levels.
