In the four months since he signed the Chips and Science Act of 2022 into law, President Biden has made a habit of visiting semiconductor plants — or plants to be — to tout the effects of the law.
Recent stops have included the groundbreaking of an Intel (INTC) facility in Ohio and a Micron (MU) plant in upstate New York. On Tuesday, the Taiwan Semiconductor Manufacturing Company (TSMC) hosted the president as it unveiled plans for an upgrade of its capabilities in Phoenix and announced plans to build a second facility nearby.
"What we are doing here in Arizona matters across the country and around the world," President Biden added when he took the stage to tout the overall investment of approximately $40 billion, which the White House called the largest foreign direct investment in the state's history.
"We're building a better America."
The event was a high-profile affair with figures from TSMC founder Morris Chang in attendance alongside Apple (AAPL) CEO Tim Cook, the CEOs of Micron and NVIDIA (NVDA), and a bevy of political officials from Commerce Secretary Gina Raimondo to Katie Hobbs, Arizona’s incoming governor.
"This state of the art facility behind us is testimony that TSMC is taking a giant step forward to help build a vibrant semiconductor ecosystem in the United States," TSMC Chairman Dr. Mark Liu said Tuesday while introducing President Biden, adding his thanks to Biden personally for the U.S. government's “continual collaboration that has brought us here.”
At the event, Biden as well as the other dignitaries in attendance discussed the two announcements, including a new facility in the works, also in Arizona, that will produce advanced 3 nanometer chips by 2026. The company also plans to upgrade its current facility to produce 4 nanometer chips by 2024.
A note of caution came from CFRA Research Senior Equity Analyst Angelo Zino, who joined Yahoo Finance Live Tuesday. Zino said much of this new capacity could end up being "trailing edge technology" and that reliance on Taiwan will continue "longer than many want to," because these facilities take years to come online amid ongoing tensions between Taiwan and China.
Biden notably didn’t visit Arizona during the recent campaign season, even while visiting neighboring states. Democrats like Governor-elect Hobbs and Sen. Mark Kelly (D-AZ) won anyway and the trip is also being criticized by Republicans for not including a visit to the border with Mexico.
As he departed for Phoenix on Tuesday morning, Biden spoke with reporters and pushed back on the criticism, saying he wasn't visiting the border "because there are more important things going on."
Billions for chipmakers
Signed into law in early August, the Chips and Science Act put $50 billion aside for the U.S. government to distribute directly to both U.S. and foreign chips companies if they agree to use the money to build facilities or engage in new research in the U.S. in the years ahead.
The cash is intended to jumpstart investments and ease reliance on the overseas nations that currently dominate chipmaking. The U.S. has fallen behind in semiconductor manufacturing in recent decades, especially when it comes to the most advanced chips. A recent report from the Semiconductor Industry Association found that 0% of the world’s most advanced logic semiconductors were manufactured in the U.S. in 2019.
The law — especially for foreign companies like TSMC — comes with what Biden aides describe as tight restrictions to ensure that the money doesn’t directly or inadvertently help U.S. adversaries like China that are also trying to buoy their own chip production.
The CHIPS Act was passed with GOP votes earlier this year and Arizona’s outgoing Republican Governor Doug Ducey spoke on Tuesday to help introduce Biden and laud the law. Nevertheless, many conservative Republicans opposed the bill entirely with Kevin McCarthy, the possible next Speaker of the House, calling it corporate welfare at the time.
Companies will be able to formally apply for the CHIPS Act money beginning in February 2023, but Biden officials have already been negotiating terms and promoting the results.
During his speech, Biden also made the case that TSMC’s new investments were a result of the bill while putting forth Arizona as a broader example that his overall economic plan is working. Flanked by massive U.S. and Arizona flags, he noted "this is going to he an incredible asset to the state of Arizona," adding "American manufacturing is back, folks."
Other new high-tech investments are also coming to the state, including an Intel plant in Chandler and a new facility from KORE Power, a lithium-ion battery cell manufacturer, in the city of Buckeye.
TSMC says their plans will require 10,000 construction workers in the coming years followed by the creation of 10,000 high-tech jobs (including 4,500 new TSMC employees) in the years ahead.
This post has been updated.
Ben Werschkul is a Washington correspondent for Yahoo Finance.