TSMC ups its Arizona chipmaking investment to $40 billion ahead of Biden's visit

New York(CNN Business) Taiwan Semiconductor Manufacturing Company is upping its investment in the United States, announcing Tuesday that it's building a second semiconductor factory in Arizona and raising its investment there from $12 billion to $40 billion.

TSMC's plans come as tensions between Washington and Beijing are rising over chips, with President Joe Biden imposing a sweeping set of controls on the sale of advanced chips and chip-making equipment to Chinese firms.

Biden visited the manufacturer's site in Phoenix and spoke about bringing jobs and investment to Arizona, calling TSMC's $40 billion commitment "the largest foreign investment in the history of this state."

"American manufacturing is back, folks," Biden said at the event. "These are the most advanced semiconductor chips on the planet, chips that will power iPhones and MacBooks, as Tim Cook can attest ... It could be a game changer."

Other lawmakers and business leaders also attended the event, including Apple CEO Tim Cook.

During the event, Biden took the opportunity to emphasize the importance of building robust supply chains for a global economy, pledging that advances in manufacturing domestically would have global ramifications abroad.

"I want to be clear, as we build a stronger supply chain, our allies and partners are building alongside us as well," he said. "Some of the companies here today are customers that are gonna buy these chips made here, some are suppliers that are going to help make these chips, and they're all — they all depend on a strong supply chain. That's why what we're doing here in Arizona matters across the country and around the world."

Biden said, "the United States is a top destination for companies across the globe looking to make investments, because we have a world class, highly skilled, committed workforce, union labor, and more — you can clap for that."

Still, he acknowledged persistent economic challenges, even while celebrating incremental progress against inflation.

"Here's the bottom line-- our approach to building the economy of the future is from the bottom up and the middle out-- that's working," he said.

Biden took special care to note additional benefits investments like TSMC's new plant would bring to American communities, mentioning by name two small business owners in Phoenix who've seen their businesses thrive as operations at the plant have expanded.

"There are countless stories like these across the country, where people are benefiting from what you all are doing, people working hard every day, never giving up, seizing every opportunity they can to get ahead," he said.

Meanwhile, Apple's Cook said: "As many of you know, we work with TSMC to manufacture the chips that help power our products all over the world, and we look forward to expanding this work in the years to come as TSMC forms new and deeper roots in America." He added that with the opening of the new facility, Apple's own Silicon chips "can be proudly stamped 'Made in America.'"

TSMC previously announced that it was building a $12 billion facility in Arizona that will eventually manufacture 3-nanometer chips, TSMC's most advanced technology. Between the two factories, thousands of "high-paying high-tech jobs" will be added to the state and 600,000 wafers per year will be produced, the company said.

TSMC accounts for an estimated 90% of the world's super-advanced computer chips, supplying tech giants including Apple (AAPL) and Qualcomm (QCOM).

Chips are an indispensable part of everything from smartphones to washing machines — but are also difficult to make because of the high cost of development and the level of knowledge required, meaning much of the production is concentrated among a handful of suppliers.

The White House is touting the new investments as a direct result of Biden's economic plan, including the $200 billion CHIPS and Science Act. Biden has been visiting communities where companies like TSMC and Intel have announced new investments since the passage of the law this summer.

"It means more workers in these major factories, but it also means more opportunities for suppliers and contractors, good paying construction jobs, opportunities for small and medium sized manufacturers and suppliers," National Economic Council Director Brian Deese told reporters in a call on Monday. "It means economic opportunity for communities that have often been left behind in economic cycles, including traditional energy communities that have powered our nation for generations and tribal nations."

The global chip shortage first surfaced at the beginning of the pandemic, which upended supply chains and changed consumer shopping patterns. Automakers cut back on their orders for chips while tech companies, whose products were boosted by lockdown living, snapped up as many as they could.

The facility Biden will visit Tuesday in Phoenix is slated to begin producing chips in 2024. The new facility should start production in 2026.

-- CNN's Nikki Carvajal, Wayne Chang, Clare Duffy, Diksha Madhok, DJ Judd and Jeremy Diamond contributed to this report.