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TSMC seeking up to $15 billion from federal government for Arizona chip plants

F

Fred Chen

Moderator
ktar.com

TSMC seeking up to $15 billion from for Arizona chip plants

TSMC is seeking up to $15 billion in tax credits and grants from the federal government to support its Arizona semiconductor plants
ktar.com ktar.com

BY AMY EDELEN | PHOENIX BUSINESS JOURNAL

Taiwan Semiconductor Manufacturing Co. is seeking up to $15 billion in tax credits and grants from the federal government to support its Arizona semiconductor plants amid concerns about subsidy criteria, the Wall Street Journal reported Wednesday.

TSMC expects to receive $7 billion to $8 billion in tax credits under the CHIPS Act, in addition to $6 billion to $7 billion in grants for its Arizona plants, according to the WSJ, citing people familiar with the matter.

TSMC is investing more than $40 billion in building two fabs in north Phoenix, marking one of the largest foreign direct investments in the state and U.S. history. It plans to employ more than 4,500 workers at its Arizona campus where it will produce 3-and-4 nanometer chips, the Phoenix Business Journal previously reported.

TSMC has expressed concern about CHIPS Act subsidy criteria, including rules that would require the company to share some profits with the U.S. government if returns exceed projections. The company is concerned that economics of its Arizona project may not pencil out if profits are capped by the government, according to the WSJ.

This story is posted in partnership with Phoenix Business Journal. Click to read the full story.
 
Fred Chen said:
ktar.com

TSMC seeking up to $15 billion from for Arizona chip plants

TSMC is seeking up to $15 billion in tax credits and grants from the federal government to support its Arizona semiconductor plants
ktar.com ktar.com

BY AMY EDELEN | PHOENIX BUSINESS JOURNAL

Taiwan Semiconductor Manufacturing Co. is seeking up to $15 billion in tax credits and grants from the federal government to support its Arizona semiconductor plants amid concerns about subsidy criteria, the Wall Street Journal reported Wednesday.

TSMC expects to receive $7 billion to $8 billion in tax credits under the CHIPS Act, in addition to $6 billion to $7 billion in grants for its Arizona plants, according to the WSJ, citing people familiar with the matter.

TSMC is investing more than $40 billion in building two fabs in north Phoenix, marking one of the largest foreign direct investments in the state and U.S. history. It plans to employ more than 4,500 workers at its Arizona campus where it will produce 3-and-4 nanometer chips, the Phoenix Business Journal previously reported.

TSMC has expressed concern about CHIPS Act subsidy criteria, including rules that would require the company to share some profits with the U.S. government if returns exceed projections. The company is concerned that economics of its Arizona project may not pencil out if profits are capped by the government, according to the WSJ.

This story is posted in partnership with Phoenix Business Journal. Click to read the full story.
Click to expand...
This article implies the negotiation by press statements strategy is working a bit. The Dept of Commerce appears to be softening its stance about profit-sharing, for example, in informal comments. Nonetheless, the application process is only in the first stage of five. Obviously, you can't negotiate unless you're in the process. I hope the DoC sees the error of its intrusive policy statements and backs down, but I doubt it.
 
> TSMC has expressed concern about CHIPS Act subsidy criteria, including rules that would require the company to share some profits with the U.S. government if returns exceed projections. The company is concerned that economics of its Arizona project may not pencil out if profits are capped by the government, according to the WSJ.

If that's really the case, I would have to agree with TSMC that they shouldn't be footing the bill. But I can't imagine it would actually go through under those conditions.
 
TSMC doesn't help themselves by stating they won't be putting leading nodes in the U.S. I haven't seen Intel restrict their nodes to trailing nodes in foreign countries. Hmmm.

It's interesting that the Taiwan government puts pressure on TSMC, but then begs for help against an invasion from China. Even so, I have to agree the CHIPS act is a mess. If it goes on long enough, the next administration might see this, and realize how incredibly odious the conditions of it are. I'm not sure this one will change too much though, but I hope I'm wrong.

Part of it seems political to me, the government wants to show it's not giving money away, in the eyes of an ignorant public. The public has no idea how much money these plants generate primarily, and also through secondary and tertiary companies that have to support the plants. It's just viewed as giving money away to rich companies so they can line the pockets of their stockholders and CEOs. I have this argument all the time, and it's difficult to dispel this opinion, however poorly conceived it is.
 
If TSM receives 15 billion dollars of tax payers money, they should allow free access to US based EDA and IP companies for this is needed to cultivate both our small and large enterprises to build a healthy ecosystem from design to finished products. These are decisions that need to be made now and not later.
 
Arthur Hanson said:
If TSM receives 15 billion dollars of tax payers money, they should allow free access to US based EDA and IP companies for this is needed to cultivate both our small and large enterprises to build a healthy ecosystem from design to finished products. These are decisions that need to be made now and not later.
Click to expand...
Free access to exactly what?
 
The Silicon Valley Bank bailout will cost $20B, which seems like a relevant comparison. For $20B it accomplishes nothing useful, whereas a couple leading fabs in the USA is quite useful. I like handouts better than bailouts, I guess.
 
I'm saying that they ought to allow 20 year old 100% US based EDA/ASIC companies that have made successful tapeouts on their 90nm, 40nm, and 16nm processes access to their design rules in a foundry where they are accepting US taxpayer funds.
 
Fabless TSMC customers in US could apply for the CHIPS subsidies, but perhaps TSMC needs to apply for non-CHIPS subsidy, i.e., not need to follow the profits-sharing. The application process itself may involve sharing corporate confidential information.
 
cliff said:
I'm saying that they ought to allow 20 year old 100% US based EDA/ASIC companies that have made successful tapeouts on their 90nm, 40nm, and 16nm processes access to their design rules in a foundry where they are accepting US taxpayer funds.
Click to expand...
TSMC, like any other fab, is driven by customers, not EDA companies. If a customer says they need your software supported then TSMC will probably devote resources to you. Otherwise, they'll probably choose to apply their resources to another EDA company. Has a TSMC customer asked for your tools to be supported?
 
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Fred Chen said:
Fabless TSMC customers in US could apply for the CHIPS subsidies, but perhaps TSMC needs to apply for non-CHIPS subsidy, i.e., not need to follow the profits-sharing. The application process itself may involve sharing corporate confidential information.
Click to expand...
Unfortunately, Fred, that's not how the US government works. Congress has the funding authority, and Congress provides funding by passing laws and approving budgets. While there are other pseudo-subsidies available like R&D credits and capital equipment depreciation in US tax laws, the CHIPS act only applies to chip manufacturing, so fabless companies are not eligible to apply.
 
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blueone said:
Has a TSMC customer asked for your tools to be supported?
Click to expand...
Yes, but the customer has to prove that they have $50M in their bank account. There are lot of tiny IOT companies that will break out if EDA and IP costs reduce, coupled with fewer employees needed (design automation is coming). There will be lots of tiny capable companies without $50M bank accounts.

Mr. Blue, that is my crowd. We support the underprivileged. The dreamers. The untouchables. Poor tiny fabless design houses working out of tents in Califonia. Clock jitters above 250fs. The suffer with copper wire without the hope of photonics. No corporate jets for meetings.. How can they possibly compete?

Seriously, if TSMC, Intel, GF, and SS push to get funding, they may want to reconsider their stance. The situation can get nasty.
 
cliff said:
Yes, but the customer has to prove that they have $50M in their bank account. There are lot of tiny IOT companies that will break out if EDA and IP costs reduce, coupled with fewer employees needed (design automation is coming). There will be lots of tiny capable companies without $50M bank accounts.
Click to expand...
Apparently not that are interesting to TSMC in a business sense. That sort of rule strikes me as the result of their getting burned one time too many.
cliff said:
Mr. Blue, that is my crowd. We support the underprivileged. The dreamers. The untouchables. Poor tiny fabless design houses working out of tents in Califonia. Clock jitters above 250fs. The suffer with copper wire without the hope of photonics. No corporate jets for meetings.. How can they possibly compete?
Click to expand...
That's not TSMC's problem, nor should the CHIPS Act, IMO, be turned into more social engineering than the Biden administration is already mistakenly trying to do. If Congress wants to fund an incubation mechanism for start-ups, then IMO there should be legislation focused on that. The CHIPS Act has already become a social engineering mess.
cliff said:
Seriously, if TSMC, Intel, GF, and SS push to get funding, they may want to reconsider their stance. The situation can get nasty.
Click to expand...
I doubt it. The Dept of Commerce is only interested in supporting the Administration's political objectives. Congress is clueless, IMO, as usual.
 
blueone said:
Unfortunately, Fred, that's not how the US government works. Congress has the funding authority, and Congress provides funding by passing laws and approving budgets. While there are other pseudo-subsidies available like R&D credits and capital equipment depreciation in US tax laws, the CHIPS act only applies to chip manufacturing, so fabless companies are not eligible to apply.
Click to expand...
I know how the US govt works, I'm from the States. :)

I might have been thinking of the proposed FABS act for AMD, NVIDIA and Qualcomm, which might indirectly help TSMC.

Otherwise, TSMC might have to limit its charges for the US fabs (to limit its own profits). From https://www.reuters.com/technology/...ct-guidance-amid-subsidy-concerns-2023-04-10/: The U.S. Commerce Department told Reuters that it will protect confidential business information and expects "upside sharing" will only happen in instances where projects significantly exceed projected cash flow.
 
Fred Chen said:
I know how the US govt works, I'm from the States. :)
Click to expand...
I apologize, Fred. I did not mean to be condescending. For some reason I thought you were from Taiwan. (You're one of my favorite posters here.)
Fred Chen said:
I might have been thinking of the proposed FABS act for AMD, NVIDIA and Qualcomm, which might indirectly help TSMC.

Otherwise, TSMC might have to limit its charges for the US fabs (to limit its own profits). From https://www.reuters.com/technology/...ct-guidance-amid-subsidy-concerns-2023-04-10/: The U.S. Commerce Department told Reuters that it will protect confidential business information and expects "upside sharing" will only happen in instances where projects significantly exceed projected cash flow.
Click to expand...
I think TSMC, Samsung, and Intel are just going to walk away if the Department of Commerce doesn't soften its stance on social engineering regulations that weren't in the bill that passed. But I have seen signs in press comments from the DoC that they are backing down. The process is so long (five steps) and so subject to administrative judgment that we won't know for a long time.
 
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