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US chip subsidies are "good to look and not delicious", TSMC is in a dilemma!

In the past year, more and more countries and regions have introduced high subsidies and industrial policies to build their own semiconductor supply chains. The list includes the United States, Chinese mainland, Japan, India, South Korea and the European Union. Recently, the EU version of the Chip Act will also be passed, and the amount of subsidies may be as high as 43 billion euros.

US chip subsidies are "good to look and not delicious", TSMC is in a dilemma!

These "chip bills" will definitely have an impact on the future of TSMC and Taiwan's semiconductor industry. The most representative is the "New Film Act" of the United States, according to the US Department of Commerce, on March 31 began to accept front-end new film manufacturing and packaging and testing industry investment applications, May 1 to accept mature process applications, June 26 began to accept all project applications, the impact of the US "Chip Act" will gradually appear.

However, Zhang Zhongmou, the founder of the Japanese front installer, and Liu Deyin, the chairman of the company, both put forward different views on the policy and content of the US "Chip Act".

Friendly shore outsourcing does not have Taiwan, China, and may fall into trouble

On March 16, Zhang Zhongmou publicly questioned, "Although only 11% of new film manufacturing is in the United States, if design, equipment, and semiconductor IP are added, the United States also has 39% of the market." What are the goals of the U.S. Chip and Science Act? Do you want to pull the manufacturing ratio to 30%~40%? Or is it just a supply chain sufficient to supply defense security? He further noted that the U.S. friendly outsourcing policy does not include Taiwan, China, "I think this is Taiwan's dilemma."

On March 31, Liu Deyin also publicly stated that the US "Chip Act" "some conditions cannot be accepted, and it will be discussed with the US government."

In the past four years, TSMC has poached Peter Cleveland, vice president of government relations, from Intel to senior vice president, constantly lobbying the US government; However, industry insiders revealed that TSMC's communication with the US government is carried out in multiple lines, and "complex strategies such as production capacity and finance are still calculated by TSMC headquarters and directly communicated with the United States." ”

According to the US Department of Commerce, the US "CHIP Act" subsidy application has various restrictions, which means that the decision of the application process within these months will affect the long-term development of TSMC.

Zhang estimates that U.S. manufacturing costs are 50 percent, or even double, higher than in Taiwan. The U.S. CHIP Act plans to allocate $39 billion to semiconductor manufacturing, building the entire semiconductor industry. The bill stipulates that the amount of direct subsidies is about 5%~15% of capital expenditure. If TSMC plans to invest $40 billion in the United States, the direct subsidies will fall at $2 billion to $6 billion, and other subsidies will be offset by investment tax credits and federal loans.

However, TSMC's capital expenditure last year was as high as $36.3 billion, and the impact of subsidies on TSMC's finances may not be as great as the cost increase.

TSMC went to the United States, and there were a bunch of subsidy problems

Even more troublesome, the U.S. CHIP Act stipulates that if you receive more than $150 million in direct U.S. funding, you must comply with a series of obligations. For example, in order to protect the money of American taxpayers, the companies receiving subsidies will be investigated in detail, in addition to determining that the subsidies will not be used for stock speculation, but will be used to invest in the semiconductor industry.

And the U.S. government will discuss the investment profit with the subsidy company, and if it earns too much, the U.S. government will ask for a share of the excess profit. The document emphasizes that the U.S. government will use various investigations to make relevant financial projections "as accurate as possible"; Therefore, before receiving the grant, each applicant company must submit a detailed financial model, the Chip Act Program Office will analyze market data, conditions, and the subsidized company must report every six months, and these materials are also regulated by the US False Declaration Act, and if violated, they will also be subject to the punishment of recovering the subsidy.

In addition, the U.S. government has set high standards for subsidized companies to hire workers and requires that Chinese mainland investments not be expanded for a decade. These requirements have raised doubts about whether TSMC's important operational secrets may be leaked or set limits on future profits.

How to treat the requirements of the US "Chip Act", Taiwanese media "Caixun" interviewed TSMC's former legal director Du Dongyou, he said that the source of the US subsidy law comes from the 1977 Federal Grant and Cooperative Agreement Act, "whether from the federal, state or municipal government funds, it is not allowed to use the subsidy funds for business unrelated to the public interest."

He also pointed out that there are different restrictions on subsidies from different sources, "Arizona also provides semiconductor subsidies, but these subsidies do not require subsidized manufacturers to Chinese mainland investment." Du Dongyou said, "Zhang Zhongmou is very right, it is very expensive to invest in the United States, and Taiwan companies should clearly understand what the goal of going to the United States is." ”

"TSMC cannot predict what restrictions the US government will add, so it is difficult to say that TSMC's investment in the United States will not be risky," Du Dongyou said, to reduce risks, Taiwanese companies need to clarify a lot of things, including the strategic direction of the United States' development, and even profit expectations within ten years, market analysis, resources such as water, electricity, labor conditions, and possible restrictions on local operations.

Observe the movement of Samsung and do not rush to call cards

Industry insiders revealed that the requirements of the "Chip Act" do not all have to accept all orders, but can choose to accept some parts and negotiate on other parts, so they can figure out their own goals in order to decide which restrictions are acceptable and which restrictions should be rejected; If you want to build a team locally, do you want to apply for and establish local job opportunity grants, and bear the restrictions. Mr. Du also said that some of the requirements, such as sharing excess profits with the U.S. government, were unfair and "would reduce the incentive for operational success."

For Taiwanese companies, it is necessary to ensure that the requirements of the subsidy can be complied with within ten years, and even additional restrictions are added later, otherwise the applied subsidy may face the risk of recovery.

The whole process of applying for subsidies is like a bridge game, for TSMC, in addition to the US government, Samsung trends must also be considered, because Samsung's new Texas factory is also about to be completed, whether Samsung applies for subsidies, accepts restrictions, or does not apply for most subsidies, will affect the competitive conditions of the two companies; So far, Samsung has not officially applied. TSMC's choice of subsidies for the "Chip Act" may have an important impact on operations, and it is also the focus of investors' attention of this season's TSMC Law Theory.

Editor: Xinzhixun-Lin Zi Source: "Caixun"

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