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TSMC considers returning US subsidies over government equity stake

Daniel Nenni

Daniel Nenni

Admin
Staff member
© Reuters

Updated at 21:10 ET (01:10 GMT) with additional context on TSMC, CHIPS Act

Investing.com-- Taiwan Semiconductor Manufacturing Corp (NYSE:TSM) executives held preliminary discussions over returning their U.S. government subsidies if the Donald Trump administration seeks equity in the chipmaker, the Wall Street Journal reported on Thursday.

The talks come after the government confirmed earlier this week that it will take a 10% stake in TSMC rival Intel (NASDAQ:INTC) in exchange for its subsidies under the CHIPS Act.

TSMC received some $6.6 billion in subsidies for an Arizona plant that began its first leg of production in late-2024.

But TSMC, the world’s biggest contract chipmaker, has never relied heavily on government support, and is considering returning the subsidies if the Trump administration seeks a stake, the WSJ reported, citing people familiar with the discussions.

Separately, the WSJ reported that the Trump administration was not looking to own equity in companies like TSMC and Micron (NASDAQ:MU), which are increasing their investments in the United States. TSMC had earlier this year pledged up to $165 billion to invest in the U.S. over the coming years.

The company was initially pressured by the Biden administration to build more manufacturing capacity in the United States, with grants under the CHIPS Act serving as a motivator.

Trump also called for more investment in the U.S., having threatened steep tariffs on semiconductor imports to encourage local manufacturing. But he had criticized the CHIPS Act and called for its end, with Trump’s administration also claiming that the act was just giving away money.

Apart from TSMC, other Asian chipmakers receiving aid under the CHIPS Act include Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), both of which have committed billions towards building more U.S. chip facilities.

Intel is by far the biggest receiver of government aid under the act, especially as the chipmaker struggles with years of slowing sales and a loss-making foundry business.
But Intel is at the heart of Trump’s ambitions for locally produced chips.

 
soAsian said:
Trump is destroying America's credibility. The CHIPS Act does have strings attached. Who's going to believe the US government when Trump can just flip the table and erase whatever was agreed on?
Click to expand...

Not true at all. The 10% stake today is by far superior to the CHIP Acts T&Cs of tomorrow. Money now versus money you may never get. It also establishes the credibility of Intel 3.0 as does the Softbank investment. In my opinion Intel has at most 3 years to get reestablished in semiconductor manufacturing. Money and credibility today is critical. Lip-Bu knows what he is doing, absolutely.
 
There is NO industry on our globe that is as capital intensive as manufacturing leading-edge logic chips in the years 2025+ !

There is NO industry on our globe that has such an almost unsurmountable competence-barrier-to-entry as manufacturing leading-edge logic chips in the years 2025+ !

IDM-X.0 and PP-Foundry are two completely different business models trying to handle these capital-intensity and competence problems.

China and the West are both trying to figure out which model in the years 2025+ will most cost-effectively support global semi-industry leading edge manufacturing. This is the oil industry of the 21th century!!

Competition a la 1970s - 1990s, as performed under the Pax Americana rules/framework, will not work in the 2025+ era.

Semi Roadmap-2025+:

1) BITE the Bullet and SPLIT INTEL.

2) collaborate / merge some second place competing PP-Foundries to handle capital and competence issues globally

3) find the global trust again on how to support and advance the semi-industry under the fading Pax Americana world structure.

4) collaborate, diversify and compete in Open Innovation.

5) kick-out Wall Street bankers and off their alpha-(Black)rock; they have become lazy casino croupiers enabling/playing with the world's rent, only for their own "intellectual fun". Cash is KING, ask Morris Chang & CC Wei how to generate and handle cash responsibly in the 2025+'s era Oil-Industry.

6) invest in science, people, and global collaboration. Be patient, humble and open, especially when you are (super) rich.

7) there are many other problems in 2025+ era that the global society needs to deal with, ask the EU, the Middle East, Africa and Asia.

8) buy Legos and play with your (Grand)kids, one of the best investments for supporting the young and old minds, and connect those diverse minds!

9) enjoy and benefit from the globe's diversity and regional differences in development and scarcity of human and capital resources

10) send 15% of your Lego purchases investments to Dan@SemiWiki
 
Last edited:
Daniel Nenni said:
© Reuters

Updated at 21:10 ET (01:10 GMT) with additional context on TSMC, CHIPS Act

Investing.com-- Taiwan Semiconductor Manufacturing Corp (NYSE:TSM) executives held preliminary discussions over returning their U.S. government subsidies if the Donald Trump administration seeks equity in the chipmaker, the Wall Street Journal reported on Thursday.

The talks come after the government confirmed earlier this week that it will take a 10% stake in TSMC rival Intel (NASDAQ:INTC) in exchange for its subsidies under the CHIPS Act.

TSMC received some $6.6 billion in subsidies for an Arizona plant that began its first leg of production in late-2024.

But TSMC, the world’s biggest contract chipmaker, has never relied heavily on government support, and is considering returning the subsidies if the Trump administration seeks a stake, the WSJ reported, citing people familiar with the discussions.

Separately, the WSJ reported that the Trump administration was not looking to own equity in companies like TSMC and Micron (NASDAQ:MU), which are increasing their investments in the United States. TSMC had earlier this year pledged up to $165 billion to invest in the U.S. over the coming years.

The company was initially pressured by the Biden administration to build more manufacturing capacity in the United States, with grants under the CHIPS Act serving as a motivator.

Trump also called for more investment in the U.S., having threatened steep tariffs on semiconductor imports to encourage local manufacturing. But he had criticized the CHIPS Act and called for its end, with Trump’s administration also claiming that the act was just giving away money.

Apart from TSMC, other Asian chipmakers receiving aid under the CHIPS Act include Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), both of which have committed billions towards building more U.S. chip facilities.

Intel is by far the biggest receiver of government aid under the act, especially as the chipmaker struggles with years of slowing sales and a loss-making foundry business.
But Intel is at the heart of Trump’s ambitions for locally produced chips.

Click to expand...

Their best move is to scandalize them beyond imagination, and put the blame on them, as T never even wanted them there to begin with, and now seeks a pretext to expel them.
 
Daniel Nenni said:
But TSMC, the world’s biggest contract chipmaker, has never relied heavily on government support, and is considering returning the subsidies if the Trump administration seeks a stake, the WSJ reported, citing people familiar with the discussions.
Click to expand...

Interesting "virtue signalling" by TSMC here.

The Taiwanese government has subsidized TSMC's business in many ways historically, starting with an initial investment that made the company possible to found (though not enough to succeed - that was the TSMC leadership team), and continuing with all kinds of tax breaks (R&D, for buying equipment locally), actively cultivating talent for TSMC, etc.

Intel certainly benefitted from the push for increasing the available pool of scientists and engineers in the 1960s by the government (triggered by NASA/The Space Race), but TSMC gets a lot of government support.
 
Paul2 said:
Their best move is to scandalize them beyond imagination, and put the blame on them, as T never even wanted them there to begin with, and now seeks a pretext to expel them.
Click to expand...

I'm not worried too much, neither seems MKWventures.

There will be a TACO trade once the temperature heats up too much, like a slowdown of US-GDP and/or rising unemployment. POTUS cannot handle true heat very well, unfortunately in many cases.

Real leaders handle and navigate true heat with wisdom and competence, just ask FDR and Churchill (never waste a good crisis) to come back for a joint session with the current WH-press corps!

The mid-terms are just around the corner, the election season will start seriously when DC comes back from vacation after Labor Day.

Simply enjoy SemiWiki's moment of fame in computer history. I'm sure the Computer History Museum will have an interview with Dan some day. Perhaps they can bribe him with some Legos, to put together a Fab with his grandkids, to accept an invitation and make some time for History?

Perhaps after Dan has handed out all of SemiWiki's forum threads to the highest bidding AI company for further analysis of leading-edge logic company :cool::p🤣 (for each leading-edge logic Fab an individual emoji !).
So, that we can continue on SemiWiki also after Dan's retirement!
 
Xebec said:
Intel certainly benefitted from the push for increasing the available pool of scientists and engineers in the 1960s by the government (triggered by NASA/The Space Race), but TSMC gets a lot of government support.
Click to expand...

Yep, very good point.

Do not underestimate the "hidden" US subsidies via DOE, DOD, DARPA and NSF. The use of the term "National Security" seems to cover/answer any (potential) WTO inquiry into "unfair competition" by the USA semi-industry.
 
Daniel Nenni said:
Not true at all. The 10% stake today is by far superior to the CHIP Acts T&Cs of tomorrow. Money now versus money you may never get. It also establishes the credibility of Intel 3.0 as does the Softbank investment. In my opinion Intel has at most 3 years to get reestablished in semiconductor manufacturing. Money and credibility today is critical. Lip-Bu knows what he is doing, absolutely.
Click to expand...

soAsian said:
Trump is destroying America's credibility. The CHIPS Act does not have strings attached. Who's going to believe the US government when Trump can just flip the table and erase whatever was agreed on?
Click to expand...
I there are two different issues.

1) The Intel investment looks like a win win given what intel needs and the fact that they are not going to do MOST of the investments needed to get grants.

2) If a country makes a commitment and legally grants money with contract terms. It cannot and should not change requirements or terms. This is already leading companies to question working with the US. Both political parties want more factories in the US.

Once that relationship is poisoned, it can be difficult to fix. I have worked with multiple companies who have not invested in a country because they are too difficult to work with....

That said, the commerce department has said it doesnt want a stake. So we are back to tariff nonsense

Side note: Lets go back to the Trump/LBT. It started with trump demanding Intel fire him. It ended with the government giving Intel 11B for part of the company. and LBT is CEO and he is taking selfies with government people. Take everything with a grain of salt.
 
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