12:37 PM EDT, 04/08/2024 (MT Newswires) -- Taiwan Semiconductor Manufacturing Co. ( TSM ) said Monday that its Arizona unit agreed to preliminary terms with the US government to receive up to $11.6 billion in grants and loans, as the Taiwanese chipmaker looks to expand its semiconductor production facilities in Phoenix, Arizona.

The US Department of Commerce is set to provide up to $6.6 billion in direct funding to the company under the CHIPS and Science Act, which was passed in 2022 to boost the country's semiconductor manufacturing capabilities. The investment requires regulatory approval in Taiwan.

As part of the agreement, TSMC said it will construct a third factory in Arizona. The first two plants are expected to begin production in the first half of 2025 and in 2028, respectively, while the third is set to become operational by the end of the decade. The three factories bring the company's total planned investment in the state to more than $65 billion.

The chip giant has the option to tap into federal loans of up to $5 billion under the terms of the agreement. It plans to claim the Treasury Department's investment tax credit of up to 25% of the total investment in Arizona. The company's US-listed stock gained 1.3% in midday trading.

"Our US operations allow us to better support our US customers, which include several of the world's leading technology companies," TSMC Chairman Mark Liu said in a statement. "Our US operations will also expand our capability to trail blaze future advancements in semiconductor technology."

The three facilities are expected to create roughly 6,000 high-tech jobs, according to TSMC. The company's combined investment creates 25,000 direct construction and manufacturing jobs, along with thousands of indirect jobs, US President Joe Biden said in a separate statement.

"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," according to Biden. "The agreement also dedicates $50 million of CHIPS funding to training and developing the local workforce."

Last month, chip maker Intel (INTC) announced a preliminary agreement with the Commerce Department to receive about $19.5 billion in grants and loans, as it sought to advance its commercial semiconductor projects across Arizona, New Mexico, Ohio and Oregon.

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