Washington; Flagstaff, Arizona — President Joe Biden on Monday announced a $6.6 billion grant to Taiwan’s top chip manufacturer to produce semiconductors in the southwestern U.S. state of Arizona, which includes a third facility that will bring the foreign tech giant’s investment in the state to $65 billion.

Biden said the move aims to perk up a decades-old slump in American chip manufacturing. Taiwan Semiconductor Manufacturing Company (TSMC), which is based in the Chinese-claimed island, claims more than half of the global market share in chip manufacturing.

The new facility, Biden said, will put the U.S. on track to produce 20% of the world’s leading-edge semiconductors by 2030.

“I was determined to turn that around, and thanks to my CHIPS and Science Act — a key part of my Investing in America agenda — semiconductor manufacturing and jobs are making a comeback,” Biden said in a statement.

U.S. production of this American-born technology has fallen steeply in recent decades, said Andy Wang, dean of engineering at Northern Arizona University.

“As a nation, we used to produce 40% of microchips for the whole world,” he told VOA. “Now, we produce less than 10%.”

A single semiconductor transistor is smaller than a grain of sand. But billions of them, packed neatly together, can connect the world through a mobile phone, control sophisticated weapons of war and satellites that orbit the Earth, and someday may even drive a car.

The immense value of these tiny chips has fueled fierce competition between the U.S. and China.

The U.S. Department of Commerce has taken several steps to hamper China’s efforts to build its own chip industry. Those include export controls and new rules to prevent “foreign countries of concern” — which it said includes China, Iran, North Korea and Russia — from benefiting from funding from the CHIPS and Science Act.

While analysts are divided over whether Taiwan’s dominance of this critical industry makes it more or less vulnerable to Chinese aggression, they agree it confers the island significant global status.

“It is debatable what, if any, role Taiwan’s semiconductor manufacturing prowess plays in deterrence,” said David Sacks, an analyst who focuses on U.S.-China relations at the Council on Foreign Relations. “What is not debatable is how devastating an attack on Taiwan would be for the global economy.”

Biden did not mention U.S. adversaries in his statement, but he noted the impact of Monday’s announcement, saying it “represent(s) a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.”

VOA met with engineers in the new technological hub state, who said the legislation addresses a key weakness in American chip manufacturing.

“We’ve just gotten in the cycle of the last 15 to 20 years, where innovation has slowed down,” said Todd Achilles, who teaches innovation, strategy and policy analysis at the University of California-Berkeley. “It’s all about financial results, investor payouts and stock buybacks. And we’ve lost that innovation muscle. And the CHIPS Act — pulling that together with the CHIPS Act — is the perfect opportunity to restore that.”

The White House says this new investment could create 25,000 construction and manufacturing jobs. Academics say they’re churning out workers at a rapid pace, but that still, America lacks talent.

“Our engineering college is the largest in the country, with over 33,000 enrolled students, and still we’re hearing from companies across the semiconductor industry that they’re not able to get the talent they need in time,” Zachary Holman, vice dean for research and innovation at Arizona State University, told VOA.

And as the American industry stretches to keep pace, it races a technical trend known as t: that the number of transistors in a computer chip doubles about every two years. As a result, cutting-edge chips get ever smaller as they grow in computing power.

TSMC in 2022 broke ground on a facility that makes the smallest chip currently available, coming in at 3 nanometers — that’s just wider than a strand of DNA.

Reporter Levi Stallings contributed to this report from Flagstaff, Arizona.
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