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Why Taiwan Semiconductor Stocks Are Rising Today
The company is expanding in Arizona with the help of the U.S. government.
Backed by billions of dollars from the U.S. government, chipmakerTaiwan Semiconductor Manufacturerfirms(NYSE: TSM)Plans are underway for a major expansion in Arizona. Investors seemed pleased with the terms of the deal, sending Taiwan Semiconductor shares up more than 2% at the opening bell Monday.
Increase Arizona Production
Taiwan Semiconductor is a contractor behind some of the most recognized technology companies in the world.Nvidia,Advanced Micro Devices The company produces chips in Taiwan. Most of the company's manufacturing capacity is in Taiwan, but the U.S. government has prioritized attracting chipmakers to build plants on U.S. soil.
On Monday, Taiwan Semiconductor Corp. announced plans to manufacture its most advanced 2-nanometer chips at a facility under construction in Arizona. The company will invest $65 billion in three manufacturing plants in the U.S., with the U.S. government providing $6.6 billion in grants and an additional $5 billion in loans.
The U.S. government is providing funding under the Chip Act of 2022. Mark Liu, chairman of Taiwan Semiconductor, said in a statement:
CHIPS and the Science Act provide TSMC with the opportunity to make this unprecedented investment and provide our foundries with access to the most advanced manufacturing technology in the United States. Our U.S. presence allows us to better support our U.S. customers, which include several of the world's leading technology companies. Our U.S. presence will also expand our ability to lead the future development of semiconductor technology.
Is Taiwan Semiconductor Worth Buying After Big Announcement in Arizona?
Taiwan Semiconductor is a key player in the artificial intelligence (AI) revolution, making chips that make AI possible. The company's proprietary technology and long-standing relationships with key customers provide it with a certain competitive moat, but questions remain about the security of its operations.
People have been worried about a possible Chinese invasion of Taiwan, and the recent earthquakes in Taiwan are yet another reminder of the existence of geologic hysteria. There is an urgent need for Taiwan Semi to diversify its operations.
With that in mind, the prospects for expansion in Arizona look good, even without the U.S. government's willingness to fund some of the costs.
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Lou Whiteman owns shares of Taiwan Semiconductor Manufacturing Company.The Motley Fool has positions in Advanced Micro Devices, Nvidia and Taiwan Semiconductor Manufacturing.The Motley Fool has a disclosure policy.
Why are Taiwan's semiconductor stocks rising today?
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