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TSMC seeks $15B in US aid despite ‘unacceptable’ terms

Taiwan Semiconductor Manufacturing Co., the world’s leading maker of advanced chips, isn’t too happy about some of the US government’s funding, even as it asks officials for billions of dollars to complete its $40 billion project in Arizona. Asks for

TSMC is seeking a total of $15 billion in US government support, reports wall street journal citing people familiar with the company’s plans. The chip maker already expects about $7 billion to $8 billion in tax credits, and may seek up to $7 billion in grants.

The US passed the CHIPS and SCIENCE Act last August, which includes nearly $52 billion in incentives for US-based chip manufacturing. Chip makers, such as Intel Corporation and Micron Technology, have said that building their new US factories depends on government aid granted under the CHIPS Act.

TSMC also hopes to use government money to support its $40 billion project in Arizona. The Taiwanese chip maker announced it would build a second factory on the site last December at a ceremony attended by US President Joe Biden, Apple CEO Tim Cook and other business leaders.


Yet the US government money comes with strict conditions imposed on its recipients, which TSMC is protesting as it begins work on its two Arizona factories.

“Some of the terms are unacceptable,” TSMC president Mark Liu told an industry meeting in Taiwan in late March.

In particular, TSMC is concerned about regulations that require the company to share some profits with the US government if it exceeds projections. According to wall street journalThe chipmaker worries that profit will be difficult to calculate because of global supply chains, and that the planned Arizona factory may not be worth the investment if profits are limited.

TSMC did not immediately respond to a request for comment.

The US included those requirements to ensure that companies could not make excessive profits after receiving government money. In February, US Commerce Secretary Gina Raimondo said, “We are not writing blank checks to any company.”

Profit-sharing agreements are certain conditions of the companies receiving the money. Recipients of government funding must also provide affordable child care.

The recipients are also constrained from expanding chip manufacturing in “countries of concern”, which includes China. (The US has also imposed tighter export controls on advanced chips and chip-making equipment to China, and is encouraging allies such as Japan and the Netherlands to do the same.)

Korean chip makers such as Samsung and SK Hynix are particularly concerned about these limits, due to their large presence, including leading chip manufacturing in China.

Korean ministers have complained to Biden officials about the CHIPS act, with the country’s trade ministry saying its terms “deepen trade uncertainties, infringe on companies’ management and technology rights as well as hinder investment in the United States.” less attractive as an alternative.”

TSMC also has operations in China, largely limited to making older chips that have more lenient restrictions. Yet deteriorating relations between the US and China and between Beijing and Taipei are still potential headwinds for the chipmaker. Investor Warren Buffett sold most of his $4.1 billion stake in TSMC last year, citing geopolitical tensions in an interview. Nikkei Asia.

The chip market is currently in a bearish state due to a drop in demand for PCs and consumer electronics. On Thursday, TSMC forecast a low- to mid-single digit decline in revenue in 2023 as part of its earnings report. Yet the chipmaker reported $6.8 billion in net income for the most recent quarter, ahead of the $6.4 billion expected by analysts.

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