TSMC would like $15 billion in subsidies and tax credits from the US government for the planned construction of two factories in the state of Arizona. However, the government would have a number of conditions for this support that are ‘unacceptable’ for TSMC.
The company hopes to get $7 to $8 billion in tax credits through the U.S. Chips Act, writes The Wall Street Journal based on sources. In addition, the company would like $ 6 to 7 billion in subsidies. This money would be needed because certain construction costs in the United States are many times higher than in Taiwan. TSMC founder Morris Chang said earlier that it is at least fifty percent more expensive to make chips in Arizona than in Taiwan.
However, the US government would not want to give the aid without conditions. For example, chip companies that receive more than $150 million in subsidies must give part of their profits to the government if the profits made from the subsidy are higher than expected. TSMC says it is concerned about the success of the Arizona chip factories if their profitability is “constrained” by this condition. In addition, according to the sources, it would be difficult to calculate the profitability of the two factories. The US government says this condition can be waived “in exceptional circumstances”.
The second controversial condition is that the government would like extensive information about TSMC’s accounting and business operations. However, the chip manufacturer does not want this information, for example about its customers and production techniques, to come out. This information is important for the US government to ensure that the grants are used ‘as promised’.
It is not clear whether the support of the United States is necessary for TSMC to build the chip factories. One of the chip factories is already being built and should be ready next year. The second chip factory must be ready for chip production in 2026. TSMC itself is investing about $40 billion in the construction of the two plants.