However, shares were trending lower on a down day for stocks.
Taiwan Semiconductor (NYSE:TSM) was awarded a $6.6 billion grant through the CHIPS and Science Act on Friday.
It is the second major award from the act to be finalized. The first major award went to Polar Semiconductor, based in Minneapolis, in September.
Overall, the bill seeks to allocate $52.7 billion toward semiconductor research, development, and manufacturing.
Taiwan Semiconductor is the largest semiconductor foundry in the world. As a foundry, it simply manufactures semiconductors for other companies and does not design them. Its clients include most of the major players, including Advanced Micro Devices (AMD), Apple, NVIDIA, and Qualcomm, to name a few.
Taiwan Semiconductor currently holds about a 60% share of the foundry market.
Three fabs to be built in Phoenix
The award is for Taiwan Semiconductor’s subsidiary, TSMC Arizona, to build three fabs, or manufacturing, plants in Phoenix as part of planned $65 billion greenfield investment.
The Biden Administration said this is the largest foreign direct investment in a greenfield project in U.S. history.
“The first of TSMC’s three facilities is on track to fully open early next year, which means that for the first time in decades an America manufacturing plant will be producing the leading-edge chips used in our most advanced technologies – from our smartphones, to autonomous vehicles, to the data centers powering artificial intelligence,” President Joe Biden said in a news release.
The company will receive the funding in phases, based on TSMC meeting project milestones. According to reports, the first $1 billion is expected to be disbursed by the end of this year.
In addition to the $6.6 billion in direct funding, the CHIPS Program Office will provide up to $5 billion of proposed loans to TSMC Arizona.
The three Phoenix-based fabs, when up and running at full capacity, are expected to manufacture tens of millions of advanced chips that will power smartphones, autonomous vehicles, and high-performance computing and AI applications. The second fab is expected to open in 2028, with the third coming online in 2030, according to reports.
“TSMC appreciates the continual collaboration with customers, partners, local communities and the U.S. government beginning in early 2020. The signing of this agreement helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S.,” TSMC Chairman and CEO Dr. C.C. Wei said.
Stock price moves lower
The news did not move the stock price higher; in fact, Taiwan Semiconductor stock was down about 1.7% on Friday. It fell on what was a bad day for stocks, as the Nasdaq had fallen about 500 points as of 2:00 p.m. ET on Friday, or roughly 2.6%.
The S&P 500 was down 91 points, or 1.6%, while the Dow Jones Industrial Average was off around 360 points, or 0.8%. The Russell 2000 was down about 34 points, or 1.5%.
Despite Friday’s drop, Taiwan Semiconductor stock has been on fire this year, up about 78% year-to-date, trading at about $185 per share. It has a median price target of $239 per share, which would suggest a 29% increase, with a slightly above average P/E ratio of 30.
Also, the company just raised its dividend to 69 cents per share, from 62 cents the previous quarter, at a yield of roughly 1.23%.
