The Biden administration has finalized a deal that will give Taiwan Semiconductor Manufacturing Co. access to $11.6 billion in federal funding for fab construction.

The White House and the Department of Commerce announcement milestone today. Approval of deal comes about a week after announcement emerged that TSMC had finished negotiating the terms of the financing.

Under the deal, the chipmaker will receive up to $6.6 billion in grants to fund a manufacturing complex it is building in Arizona. TSMC also has the option to access loans of up to $5 billion.

Administration officials said Bloomberg that the company will receive at least $1 billion before the end of the year. According to the newspaper, the reason is that TSMC has reached some of the project milestones necessary to unlock funding.

This contract marks the first major funding agreement under the CHIPS Act to receive the green light. The manufacturing complex that TSMC will build with this financing represents the largest foreign direct investment of its kind in the United States. TSMC plans to spend more than $65 billion on the project, which will allow it to build three factories north of Phoenix.

The first of the three factories would already manufacture chips in limited volumes. According to a recent reportthe factory produces the A16 Bionic processors that power Apple Inc’s iPhone 14 line. The factory’s production lines use four- and five-nanometer chip manufacturing processes.

The other two factories TSMC plans to use newer technologies. These technologies include the company’s upcoming 1.6 nanometer node, the most advanced production process announced to date.

The part of the transistor that manages how electricity passes through it is known as the gate. In chips based on TSMC’s 1.6-nanometer node, the gate will surround its host transistor on all sides to reduce power leakage, which should improve power efficiency. Additionally, the technology uses tiny wires to deliver electricity directly to each transistor.

TSMC expects chips based on this process to deliver up to 10% better performance than two-nanometer silicon using the same amount of power. Alternatively, they can offer the same performance for a 20% reduction in power consumption.

Bloomberg reported today that additional funding agreements under the CHIPS Act would be reached in the coming weeks. GlobalFoundries Inc. could be among the chipmakers finalizing deals. The company reportedly finished negotiating the terms of its contract around the same time as TSMC.

Earlier this year, GlobalFoundries secured $1.5 billion in funding for three fabulous projects. One initiative aims to expand the company’s capacity to make gallium nitride chips, used for tasks such as powering electric vehicle chargers. GlobalFoundries also plans to expand an existing New York factory where it makes standard silicon chips and build a new one nearby.

Picture: TSMC