Shares of Taiwan Semiconductor Manufacturing Company (TSM) — commonly referred to as TSMC — are moving higher after the Biden administration announced it will give $6.6 billion in federal grants to the chip maker, as the company adds another $25 billion to its planned investment into the state of Arizona, totaling up to $65 billion in investments into domestic chip operations.

Yahoo Finance Anchors Seana Smith and Jared Blikre break down the latest development for the company in the AI chip space.

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

SEANA SMITH: Shares of Taiwan Semiconductor are moving higher after the Biden administration announcing that the chip maker is going to receive up to $6.6 billion in federal grants as it gears up for a $25 billion expansion in the state of Arizona. Now, TSMC is going to invest more than $65 billion in total. And now that third a chip factory to the manufacturing complex, it started building a couple of years ago back in 2021. Now, when it comes to the importance of this with projects like this one from TSMC here, Jared, the Commerce Department also saying that the US is now on track, still, to make about 20% of the world's top chips, most cutting-edge chips by 2030. Obviously, a massive priority here for the Biden administration.

JARED BLIKRE: Yes, it's all about what's being fabricated domestically, and we're talking three huge plants in Arizona. And it's necessary to understand the basic structure of the chip market here. When we talk about Nvidia, Nvidia doesn't make their own chips for the most part, they farm it out. So Taiwan Semi is the one that invests in the technology that allows them to fabricate these chips.

And Taiwan Semi, a very important customer, not only of Nvidia but also of AMD. And just the scale of this is astounding. Intel already got $8.5 billion in chips [INAUDIBLE] grant, we're talking Taiwan Semi, $6.6 billion. But also, there's another $5 billion in loans. So we're talking about $11.6 billion to this one company, and just the scale of this is really impressive.

If we can go to the YFi interactive just real quickly here, here's a heat map as we're looking at the semiconductor space today. But I want to show what's going on this year. And here's Nvidia up 77.4%, and here's Taiwan Semi up 38.3%. And if we by performance, you can see the huge outperformance by names like Nvidia Supermicro, that's number one at 228%. And then Intel in the dust here, down 23% and GlobalFoundries, down 16%.