By David Shepardson

WASHINGTON (Reuters) -Taiwan Semiconductor Manufacturing Co has begun producing advanced four-nanometer chips for U.S. customers in Arizona, Commerce Secretary Gina Raimondo told Reuters, a milestone in the Biden administration’s semiconductor efforts.

In November, Commerce finalized a $6.6 billion grant to TSMC’s U.S. unit for semiconductor production in Phoenix, Arizona.

“For the first time ever in our country’s history, we are making leading edge four-nanometer chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo told Reuters in an interview saying it had begun in recent weeks.

“That’s a big deal — never been done before, never in our history. And lots of people said it couldn’t happen,” Raimondo said of the previously undisclosed production start.

A spokesperson for TSMC, the world’s largest contract chipmaker and a major supplier to Apple and Nvidia which reports earnings next week, declined to comment Friday.

In April, TSMC agreed to expand its planned investment by $25 billion to $65 billion and to add a third Arizona fab by 2030.

Congress created a $52.7 billion semiconductor manufacturing and research subsidy program in 2022. Commerce convinced all five leading edge semiconductor firms to locate fabs in the United States as part of the program.

Raimondo told Reuters earlier that Commerce had to convince TSMC to boost its U.S. plans.

“It didn’t happen on its own… We had to convince TSMC that they would want to expand,” Raimondo said.

TSMC will produce the world’s most advanced two-nanometer technology at its second Arizona fab expected to begin production in 2028. TSMC also agreed to use its most advanced chip manufacturing technology called “A16” in Arizona.

The TSMC award from Commerce also includes up to $5 billion in low-cost government loans.

Raimondo wants the United States to make 20% of world’s leading-edge logic chips by 2030 — up from the 0% before TSMC began production in Arizona.

In April, Commerce said TSMC expects to begin high-volume production in its first U.S. fab by the first half of 2025.

Last month, Commerce finalized an award of $407 million to help fund Amkor Technology’s planned $2 billion advanced semiconductor packaging facility in Arizona, which is set to be the largest of its kind in the U.S.

Amkor’s Arizona plant when fully operational will package and test millions of chips for autonomous vehicles, 5G/6G and data centers. Apple will be its first and largest customer with the chips produced at a nearby TSMC facility.

(Reporting by David Shepardson;Editing by Alistair Bell and Diane Craft)

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