Why Has the Stock of Taiwan Semiconductor Increased Today?

With the backing of billions of dollars from the US government, chipmaker Taiwan Semiconductor Manufacturing (NYSE: TSM) is proposing a massive expansion in Arizona. At Monday's opening, shares of Taiwan Semiconductor were up over 2%, suggesting that investors were happy with the deal's conditions.  

Enhancing Arizona's output Nvidia, Advanced Micro Devices, and other industry heavyweights rely on Taiwan Semiconductor as a chip supplier. The company's home Taiwan is home to a large chunk of its production capacity, but the United States government has made it a point to lure chipmakers to construct in the US.  

Taiwan Semiconductor revealed on Monday that a plant in Arizona is now under development and would produce cutting-edge 2-nanometer chips.  

With the help of $6.6 billion in subsidies and more than $5 billion in loans, the business is spending $65 billion on three fabrication sites in the United States.  

The Chips Act of 2022 authorized financial support from the federal government. Mark Liu, chairman of Taiwan Semi, made the following remarks:  

The chips that enable artificial intelligence (AI) are made by aiwan Semiconductor, which is the backbone of the AI revolution. Although the firm has a competitive moat in the form of its expertise and long-term connections with important clients, concerns regarding the safety of its operations persist.  

A recent earthquake in Taiwan served as a sobering reminder of the geological dangers, and concerns about a possible Chinese invasion of the island persist. Diversifying its operations is an absolute necessity for Taiwan Semi.  

Keeping that in mind, the expansion in Arizona is bullish regardless of whether or not the United States government is willing to contribute financially.  

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