President Biden visits TSMC's Arizona plant as Taiwanese chipmaker says it would more than triple its planned investment there to $40 billion, among the largest foreign investments in American history.

"American manufacturing is back, folks. American manufacturing is back," says Biden at the plant in Phoenix, Arizona. (Reuters)

President Joe Biden has declared the comeback of US manufacturing at the site of a mammoth expansion to a Taiwanese-owned semiconductor plant aimed at breaking risky US dependency on foreign-based producers for the vital component.

"American manufacturing is back, folks. American manufacturing is back," Biden said at the plant in Phoenix, Arizona, accompanied by senior political allies and titans of the corporate world, including Apple CEO Tim Cook and Micron CEO Sanjay Mehrotra.

The project by TSMC, the world's biggest maker of leading-edge chips, would go a long way to meeting the US goal of ending reliance on foreign-located factories — particularly in Taiwan, which is under constant threat of being absorbed or even invaded by China.

TSMC, or Taiwan Semiconductor Manufacturing Company, announced it is building a second Phoenix plant by 2026, ballooning its investment in Arizona from $12 billion to $40 billion, with a target of producing some 600,000 microchips a year.

Most of the current US supply of microchips comes from overseas. 

Although the companies are largely based in reliable US allies in Asia, the sheer distance and, especially, the geopolitical tensions around Taiwan have the US government and companies like Apple nervous.

"Virtually every large tech firm, including automotive firms and any company that uses technology, is sweating bullets that something's going to happen between Taiwan and China. And so there's a massive rush to shift manufacturing out of both countries," technology analyst Rob Enderle said.

READ MORE: Expert: China, Taiwan tensions threaten global semiconductor industry

Job growth 

Biden used the visit to emphasise how his policies foster job growth in what could be a challenge to the incoming Republican House majority.

The Democratic president maintains that the factory jobs fostered by $52 billion in semiconductor investments and another $200 billion for scientific research will help to revive the US middle class.

About 10,000 high-tech jobs will be created once both plants are working, the company said.

White House National Economic Council Director Brian Deese said the "major milestone" is one of the largest foreign direct investments in US history, while TSMC chairman Mark Liu heralded "a giant step forward to help build a vibrant semiconductor ecosystem in the United States."

Biden clearly hoped to get political credit for the investment influx, pointing to the effect of his signature CHIPS Act, which sets aside almost $53 billion for subsidies and research in the semiconductors sector.

It's a message he'll want to spread in Arizona, which was long a Republican-dominated state but has turned into a battleground where the president's Democrats do increasingly well.

READ MORE: Chip wars: How US short-circuited China’s semiconductor ambitions

Encouraging private investment 

The twin plants "could meet the entire US demand for advanced chips when they're completed. That's the definition of supply chain resilience," Ronnie Chatterji, National Economic Council deputy director for industrial policy, told reporters.

Biden framed the TSMC investment in a broader context of revitalising US-based manufacturing — one of his presidency's key themes.

"Over 30 years ago, America had more than 30 percent of the global chip production. Then something happened," he said.

"American manufacturing, the backbone of our economy, began to get hollowed out. Companies moved jobs overseas. Today we're down to producing only around 10 percent of the world's chips, despite leading the world in research and design."

Deese, one of Biden's most senior advisors, said Biden's signature public investment policies — the CHIPS Act and the giant Inflation Reduction Act — are revolutionising how the government works with private companies.

For almost four decades, the idea was "trickle down," where the government would "get out the way" and cut taxes for big companies to attract investment, he said.

The goal is to use public money to kickstart activity and "crowd in" investors.

The goal is not to exclude "private companies, but encouraging private investment at historic scale," Deese said.

READ MORE: Taiwan signals its chip firms will follow new US rules restricting China

Source: TRTWorld and agencies