TSMC Secures $11.6 Billion from the US Government: A Boost for American Semiconductor Production

In a landmark move aimed at bolstering domestic semiconductor manufacturing, Taiwan Semiconductor Manufacturing Company (TSM) is set to receive a substantial financial package from the US government under the CHIPS and Science Act. This funding, totaling $11.6 billion, comprises both grants and loans, and underscores the strategic importance of semiconductor production for the United States.

TSMC’s Expansion Plans

Under the terms of the agreement, TSMC will utilize this funding to not only enhance its existing operations but also to embark on ambitious expansion initiatives. A significant component of this expansion strategy involves the construction of a third manufacturing facility in Phoenix, Arizona. This facility, alongside the two plants already under construction, signifies TSMC’s commitment to establishing a robust semiconductor ecosystem within the United States.

The Third Fab: A Leap Forward in Semiconductor Technology

The newly announced third fab is slated to produce chips utilizing 2nm or more advanced process technologies, depending on customer demand. With production expected to commence by the end of the decade, this facility represents a significant leap forward in semiconductor manufacturing capabilities on American soil.

Economic Impact and Job Creation

The investment in TSMC’s Arizona facilities is not only poised to bolster the nation’s semiconductor infrastructure but also promises substantial economic benefits. TSMC’s total investment in Arizona is projected to reach $65 billion, and the project is estimated to create approximately 6,000 direct manufacturing jobs, over 20,000 construction jobs, and tens of thousands of indirect jobs. This infusion of employment opportunities and economic growth underscores the pivotal role that semiconductor manufacturing plays in driving local and national prosperity.

TSMC Chairman’s Vision

Mark Liu, Chairman of TSMC, expressed enthusiasm regarding the potential of this funding package. He emphasized that it would enable TSMC to make unprecedented investments in cutting-edge semiconductor technologies within the United States. This, in turn, positions TSMC to better serve its American clientele, including leading technology companies, while also spearheading future advancements in semiconductor technology.

Overcoming Challenges: Delays and Progress

TSMC’s journey towards establishing its manufacturing presence in Arizona hasn’t been without challenges. The construction of the two previously announced fabs faced delays, attributed to issues surrounding talent acquisition and production timelines. However, recent developments indicate a reversal in this trajectory, with TSMC reporting that construction is ahead of schedule. Pilot production operations are anticipated to commence by mid-April, with mass production preparations slated for completion by year-end. This progress marks a significant milestone in TSMC’s efforts to ramp up semiconductor production capabilities in the United States.

National Semiconductor Strategy: Supporting Industry Players

TSMC’s funding package is part of a broader governmental initiative to fortify domestic semiconductor manufacturing. Other industry players, including GlobalFoundries and Intel, have also received substantial financial support under the CHIPS and Science Act. GlobalFoundries secured $1.5 billion in funding to bolster semiconductor production capabilities at its New York and Vermont sites, while Intel received $8.5 billion in direct funding, along with low-interest rate loans and investment tax credits. These investments underscore the government’s commitment to fostering innovation, enhancing national security, and bolstering America’s position in the global semiconductor industry.

TSM Technical Analysis

Trend Analysis:

• The stock appears to be in an overall uptrend, as indicated by the price being above both the 50-day (blue line) and 200-day (red line) moving averages.
• The 50-day moving average is above the 200-day moving average, which is typically considered a bullish signal.

Momentum Indicators:

• Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI): The RSI is at 61.62, which suggests the stock is neither overbought nor oversold. It indicates a healthy momentum in the current trend.
• Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: Currently, the Stochastic RSI is pointing upwards, showing increasing momentum, which could mean that the price might continue to rise in the short term.
• Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX): With an ADX value of 35.31, the trend strength is moderate to strong. This suggests that the current trend is established and likely to continue.

Volume and Money Flow:

• On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV line is stable and not showing any significant divergence from the price action, which suggests that the volume is consistent with the current price trend.
• Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator is in the negative territory, which could indicate that there might be some selling pressure or distribution occurring.

Recent Price Action:

• There was a recent spike in price followed by a pullback. The highest peak seems to be around $160, which could be considered a resistance level.
• The current price is stabilizing after the pullback, which might indicate that it’s consolidating before its next move.

Based on these observations, the technical indicators suggest that TSM is in a solid uptrend with a moderate to strong trend strength. However, investors should watch for potential resistance around the recent high and pay attention to volume-related indicators which show some signs of selling pressure.

In conclusion, TSMC’s receipt of $11.6 billion in funding from the US government marks a significant milestone in the nation’s quest to fortify its semiconductor manufacturing capabilities. With ambitious expansion plans underway and a renewed focus on overcoming challenges, TSMC is poised to play a pivotal role in driving technological innovation and economic growth within the United States. As the semiconductor landscape continues to evolve, strategic investments and partnerships will be crucial in ensuring America’s leadership in this critical industry.