Taiwan Semiconductor Manufacturing Co. and GlobalFoundries Inc. have worked out the terms of their financing agreements under the CHIPS Act, Bloomberg reported Today.

The companies signed preliminary versions of the contacts earlier this year. The initial terms allocated more than $13 billion in grants and loans to the two chipmakers. According to today’s report, the finalized terms negotiated by TSMC and GlobalFoundries set funding amounts “roughly consistent with preliminary agreements.”

TSMC sign its initial funding agreement with the U.S. Department of Commerce in April. Under the terms announced at the time, the chipmaker is set to receive $6.6 billion in grants and $5 billion in loans. The funding will be used to support the construction of a large chip manufacturing center in Arizona.

The original plan was to build two manufacturing plants at a cost of $40 billion. After securing CHIPS Act funding, the company increased the project’s budget to $65 billion and announced plans to build a third manufacturing plant in Arizona.

The first of three chip factories is already producing processors in limited quantities. These processors would have include the A16 Bionic systems-on-a-chip, which power some of the iPhones that Apple Inc. launched in 2022 and 2023. The factory would operate at higher efficiency, a measure of manufacturing reliability, than some of TSMC’s previous facilities.

Apple’s A16 chips and other processors made at the new factory are based on a four-nanometer node. The other two factories TSMC is building in Arizona will use a more advanced two-nanometer process. Upcoming technology is expected to offer better energy efficiency and performance, as well as a number of other benefits.

TSMC’s two-nanometer node will introduce a chip design technology called NanoFlex. This will allow customers to mix and match two types of circuits, or cells, in their chips. One type is optimized for space and energy efficiency, while the other variety will sacrifice some efficiency for 15% better performance.

The four-nanometer production facility is expected to begin mass production next year. The other two installations will be commissioned by 2028 and 2030 respectively.

Global Foundries won $1.5 billion in CHIPS Act funding about two months before TSMC. The preliminary agreement the company signed with the Department of Commerce specified that the capital would be dedicated to three facilities in New York and Vermont.

In New York, GlobalFoundries will upgrade an existing factory by installing equipment to manufacture vehicle chips. It also plans to build a second factory nearby, which will also make chips for the automotive sector as well as a number of other industries.

GlobalFoundries’ investment in Vermont will increase capacity at an existing factory where it currently employs approximately 2,000 workers. One goal of the upgrade is to increase the rate at which the facility produces gallium nitride chips. These chips can withstand higher temperatures and voltages than standard processors, making them well suited for use cases such as powering electric vehicle charging equipment.

According to Bloomberg, the CHIPS Act financing agreements negotiated by TSMC and GlobalFoundries are currently awaiting signature. It is unclear when the contracts will be finalized. Once the Ministry of Commerce officially grants funding, TSMC and GlobalFoundries will receive the funds in installments subject to meeting construction and production volume milestones.

Photo: TSMC