TSMC poised to finally benefit from $53B US chip fund

Apple chip partner TSMC may soon benefit from the 2022 Chips Act, with the $53 billion grant pool expected to be tapped within the coming weeks.

The CHIPS for America Fund, also known as the Chips Act, was approved in 2022 as a way to build up the U.S. semiconductor industry, via the issuing of grants and loans to companies in the space. Over a year later, funds may finally get awarded.

The Biden Administration is anticipated to award billions from the $53 billion pool to chip makers including Intel, TSMC, and others to construct factories in the U.S., reports the Wall Street Journal.

Industry executives knowledgable about the negotiations believe some announcements could arrive before the March 7 State of the Union address, in a move designed to show off President Biden's economic achievements ahead of the main presidential race.

The announcements would be preliminary, with periods of due diligence and final agreements to be made at a later time, and an expectation of fund releases at project milestones.

It is believed over 170 companies have applied to the fund since its inception, but only two small grants have been issued so far.

Among the companies likely to benefit from the fund is TSMC, Apple's chip partner, which is in the process of constructing two fabrication plants in Arizona, though the second may not open until 2028.

Of the $53 billion, $39 billion is set aside as manufacturing grants that can cover up to 15% of the total cost of a project, up to $3 billion per fab. Loans, loan guarantees, and tax credits also form part of the funding package.

5 Comments

sdw2001 17459 comments · 23 Years

About 9 months ago

On the surface it seems like a good use of taxpayer dollars. But it’s government and money is fungible. There are unintended consequences as well, even if the program is managed well. We’d be better off making the business environment better….including regulatory, fiscal and monetary—-but again…this is government we’re talking about.

nubus 609 comments · 8 Years

sdw2001 said:

On the surface it seems like a good use of taxpayer dollars. But it’s government and money is fungible. There are unintended consequences as well, even if the program is managed well. We’d be better off making the business environment better….including regulatory, fiscal and monetary—-but again…this is government we’re talking about.

Companies like Apple, Nvidia and AMD decided to single source key components from a country that isn't even recognized by the US. Either chip production is moved stateside or US will have to defend Taiwan to get the chips needed. The bill should however have been footed by the companies that put US at risk through these imports.

jSnively 396 comments · 13 Years

nubus said:

sdw2001 said:

On the surface it seems like a good use of taxpayer dollars. But it’s government and money is fungible. There are unintended consequences as well, even if the program is managed well. We’d be better off making the business environment better….including regulatory, fiscal and monetary—-but again…this is government we’re talking about.

Companies like Apple, Nvidia and AMD decided to single source key components from a country that isn't even recognized by the US. Either chip production is moved stateside or US will have to defend Taiwan to get the chips needed. The bill should however have been footed by the companies that put US at risk through these imports.

Yup. Without going too hard in the paint and derailing things, I think there's a fairly solid national security argument to be made here with respect towards Taiwan, China and US relations. I am happy to see some forward-looking tax dollars being spent, even if historically the costs on this stuff do tend to balloon.

BlueLightning 156 comments · 7 Years

Intel plans to delay new US chip plants, due to falling demand. Probably means funds more likely to go to firms like TSMC, IBM, VSH and TXN.
Intel has other plants on the drawing board, in Europe, Middle East and Asia (may also be targeted for delays).
Chip production has been a boom and bust business in the past.

Several military gear manufacturers provide hardened and exotic chip production (as a relatively small part of their companies).
Global Foundries (partially owned by a Middle Eastern sovereign wealth fund) also produces military chips, and has a large US plant (former IBM chip plant).
Japan and Germany are spending a lot to revitalize their once thriving chip plants.
China wants to be the leader in optical chips, potentially leap-frogging silicon dreams of most other countries.

South Korea has Samsung, which has provided chip foundry services to Apple in the past, and is probably on par with TSMC.
I think my 16 year old iPod Classic has a Samsung CPU (and maybe other components).
Believe Samsung has a (non-manufacturing?) building not far from Apple's prior HQ campus.

BAE Systems (UK-based military supplier to USAF, Army...) was an early recipient of a small grant from CHIPs Act.

If US, Japan, Germany, China, South Korea and others spend the amounts discussed, we may end up with too much supply of chips and too little demand. Some of the plants may close due to downsizing or bankruptcy. Similar to bankruptcies brought on by excessive supply in the oil and gas industry about 5 years ago (poor investor profits from about 2014 to 2020, for the most part). Titans of Oil have told investors they will keep a lid on oil production to prevent poor profits, and will not drill baby, drill again. Investors want increasing dividends and stock prices. As primary provider of capital, investors call the shots in capitalism.

Many chip applications do not require state of the art chips, and older designs are used to meet target production costs. Many cars have 50 or more microprocessors (and have had this level of complexity for more than 10 years).