By Allison Morrow, CNN Business
The world’s leading producer of advanced computer chips, Taiwan Semiconductor Manufacturing Company, announced an expanded $40 billion investment in its US production hub in Phoenix.
President Joe Biden visited the manufacturer’s site in Phoenix and spoke about bringing jobs and investment to Arizona, calling TSMC’s 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 … It could be a game changer.”
Why it’s a big deal: TSMC produces an estimated 90% of the world’s super-advanced chips — indispensable components for pretty much every device you interact with day to day, like your car and your smartphone, along with a bunch that you most likely don’t, like military drones and missiles.
Some of TSMC’s biggest clients include Apple and Qualcomm.
It was already building one factory, set to open late next year, but the expanded investment will add a second facility that TSMC hopes will be online in 2026.
Why the big push in Phoenix?
The White House is touting the new investments as a direct result of the CHIPS bill, which Biden signed this summer. That measure invests more than $200 billion to encourage companies to bring chip production back onto American soil.
The motivation to shift production closer to home gained force on both sides of the aisle early in the pandemic.
Remember those long wait times for new cars, or crazy high prices for used cars? That was primarily because of a chip shortage, sparked by sudden global demand for gadgets to facilitate remote work and school.
The goal is to make sure US supplies are secure in the event of another catastrophe, while also helping to foster a resurgence of American manufacturing.
Of course, it won’t be easy.
TSMC is already hitting snags in its Phoenix operation, according to the Wall Street Journal. Among them are relatively higher costs to build in the United States and a shortage of sufficiently trained personnel.
But there’s a political motivation also driving Taiwan-based TSMC to deepen ties with the United States. As tensions between Washington and Beijing escalate, the Biden administration has repeatedly underscored the US’s commitment to defend the island in the event of a Chinese invasion.
NUMBER OF THE DAY $4.7 billion
The global airline industry is expected to return to profitability in 2023, after hemorrhaging tens of billions during the worst of the pandemic. In a forecast released Tuesday, the International Air Transport Association predicted that airlines will collectively earn a net profit of $4.7 billion next year, despite a potential recession.
I guess pummeling your customers with unavoidable fees really adds up — good work, everyone.
The debt ceiling debate is this fun little phenomenon that emerges in DC every few years, like leap year or a meteor shower, where our nation’s elected officials take pettiness to the next level and drive the US economy to the brink of a calamitous default. Grab some popcorn and buckle up, America.
This week, Goldman Sachs published a report warning that the 2023 debt ceiling battle could be on par, disaster-wise, with 2011’s — aka the one that cost the United States its perfect AAA credit score and sowed chaos on Wall Street.
Raising the debt limit, the bank wrote, will be “necessary but hard to achieve.”
For the uninitiated: The “debt ceiling” is simply the federal government’s borrowing limit. Congress set it up over a century ago to keep borrowing in check. And historically, it wasn’t a big deal for lawmakers to agree that they’d raise the limit, because failing to do so would be, like, really really bad. (Interest rates would shoot up, the stock market would be a shambles, and the value of the US dollar would tank. The economist Mark Zandi once called it “financial Armageddon.”)
But already, Republicans are drawing battle lines, my colleague Matt Egan writes.
House GOP leader Kevin MacCarthy, who is vying to become House Speaker, told CNN before the midterm election that Republicans would demand spending cuts in exchange for lifting the debt ceiling. Senator John Thune told Bloomberg last week the debt ceiling could be a way to push through budget cuts.
Goldman Sachs noted that the political environment next year will have “echoes of 1995 and 2011” — the two most tense standoffs over the debt limit in recent history.
The good news is we have time before things get wild. Economists at Jefferies said in a recent research report that default risk is unlikely to emerge until “at least” the end of September of next year.
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