TMSC Gets $6.6 Billion in CHIPS Act Funding, Stock Rises

American depositary receipts (ADRs) of Taiwan Semiconductor Manufacturing Company Ltd. (TSM) rose premarket Monday following the announcement of up to $6.6 billion in direct federal funding for the Arizona factory complex TSMC started construction on in 2021.

The project is the latest announcement of funding from the CHIPS and Science Act, a 2022 piece of legislation supported by President Joe Biden that earmarked over $50 billion for investment in semiconductor research and manufacturing facilities to be built in the U.S. after the industry mostly has moved overseas in recent years.

Biden’s administration has said it wants to make the U.S. a leading semiconductor manufacturer because of how important the chips are in everyday objects like smartphones and cars, and to address weaknesses in the global supply chain that were revealed by the pandemic.

The federal funding announcement also came with TSMC’s own announcement that it would build a third factory at the Phoenix site, growing the company’s total investment in the area to at least $65 billion by the time the factories are completed, the company said in a statement. It also is eligible for up to $5 billion in loans.

“The CHIPS and Science Act provides TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” TSMC Chairman Dr. Mark Liu said in a statement. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

TSMC’s customers include technology companies like Apple (AAPL) and Nvidia (NVDA), which could benefit from having a supplier providing key parts from inside the U.S. once the three factories are online by TSMC’s estimates of 2025, 2028, and 2030.

“These facilities will manufacture the most advanced chips in the world, putting us on track to produce 20% of the world’s leading-edge semiconductors by 2030,” President Biden said in a statement. “The agreement also dedicates $50 million of CHIPS funding to training and developing the local workforce, so workers don’t have to leave their hometowns to find good-paying jobs in innovative industries.”

TSMC and the White House estimate the project will create about 26,000 jobs from building the factories, and operating them once they’re open.

Several projects have already received CHIPS funding, from tens of millions for upgrades to existing facilities to over $8 billion that was granted to Intel (INTC) for facilities across a number of states, including Ohio, New Mexico, Arizona, and Oregon, and $1.5 billion for GlobalFoundries (GFS) to build and expand facilities in New York and Vermont.

The announcement drove TSMC ADRs nearly 2% higher before markets opened Monday after closing Friday up 1.2% to $141.36. TSMC has gained nearly 40% so far this year and more than 58% in the last 12 months, and is set to report first-quarter earnings April 18.