Biden accelerates the reshoring of chip manufacturing before leaving office. Subsidies from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) and Gexin (GFS.US) are about to be implemented.

Media reports citing informed sources revealed that Chinese Taiwan's chip manufacturing giant Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) and US chip manufacturing leader GlobalFoundries (GFS.US) have reached a binding agreement on billions of dollars in subsidies and special loans to support the construction of factories in the United States. The Biden team is racing against time to distribute subsidies under the "Chip Act" to achieve the ambitious goal of "bringing chip manufacturing back to the US" as vigorously promoted by the Biden administration. Informed sources indicate that some US officials are expected to announce the agreement in the coming weeks. It is understood that these significant agreements on subsidies and loans were announced earlier this year as preliminary agreements. The Biden administration is now working to distribute the subsidies funded by the US government under the "Chip and Science Act" passed in 2022 before the end of the term in January. Some news commentators believe that the purpose of the Biden administration's expedited distribution of subsidies may be to leave at least a historic achievement of having pushed for "bringing chip manufacturing back to the US" before leaving office in January next year. It may also be due to pressure from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and other non-US chip giants like Samsung, who are concerned that Trump's administration might refuse to provide any subsidies to overseas chip companies. According to informed sources, it is still unclear when the subsidy and loan agreements will be formally signed, and when the incentive measures will be officially announced. Informed sources state that the amount of subsidies is roughly in line with the preliminary agreements. According to the preliminary agreements, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR announced in April that it would receive up to $6.6 billion in grant subsidies and up to $5 billion in special loans from the US government to support the construction of three large chip manufacturing plants in Phoenix, Arizona, in the US, which could potentially achieve mass production of 3nm and below advanced chips. Compared to the large scale of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, the smaller US chip manufacturer GlobalFoundries has entered into an agreement since February, receiving approximately $1.5 billion in grant subsidies and up to $1.6 billion in loans to support a new factory in New York, and expand existing chip manufacturing infrastructure in New York and Vermont. With the support of the "Chip Act" passed by the US Congress, the US government will allocate $39 billion in grant subsidies, along with billions in loans and 25% tax incentives, to revitalize the long-neglected chip manufacturing industry in the US, which has mainly shifted to Asia in the past few decades. It has also attracted private investments ten times the commitment amount, including private investments related to the most advanced 3nm and below process chips, mature semiconductor processes, and supply chain component factories. It is understood that more than 20 chip giants, including Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Samsung, Intel Corporation, and Micron, are waiting for government funding. After the preliminary agreements were negotiated, they spent several months conducting due diligence. There is still nearly $3 billion left to be allocated to specific initial agreements. However, the new binding agreements reached between Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and GlobalFoundries, the two major chip manufacturing leaders, mean that under the leadership of Donald Trump, who is set to re-enter the White House in January, it is still possible to complete most of the funding allocations. Once the contract is signed, subsidy or loan funds will be disbursed in installments based on specific project milestones. Trump publicly criticized the "Chip Act", causing urgency among Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and Samsung White House policy leaders, including Biden, are eager to resolve these issues as soon as possible so that funds can start flowing to projects that meet these benchmarks, possibly because of recent comments made by Trump calling the Chip Act "terrible." It is not yet clear what Republican control will bring. House Speaker Mike Johnson has stated that after the possibility of proposing and immediately retracting a full repeal of the "Chip Act", he hopes to "simplify" the law. Pushing for "bringing chip manufacturing back to the US" has been a significant goal that Biden has been vigorously promoting since taking office. Biden himself views the reshoring of high-end manufacturing as one of his outstanding political achievements. According to statistics from the Semiconductor Industry Association (SIA), the US's share in global semiconductor manufacturing capacity dropped from 37% in 1990 to just 12% in 2020. Therefore, Biden considers reshoring chip manufacturing to the US as one of the most important tasks of his term. The US government passed the "Chip and Science Act" in 2022, aiming to help chip companies build more chip factories in the US, with the ultimate goal of making the US once again the leading country in chip manufacturing and accelerating the realization of the "bringing chip manufacturing back to the US" desired by the US government. With the recent agreements with Taiwan Semiconductor Manufacturing Co., Ltd. SSponsored ADR announced that the first large chip factory in Arizona has achieved a significant breakthrough in chip yield rate, with a process technology at the 4nm level, which is one of the most advanced processes of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, second only to the 3nm level. "Chip manufacturing reshoring to the United States" no longer seems to be an empty slogan.However, recently elected President Trump, who just announced his victory, fiercely criticized the "chip bill." He stated that imposing tariffs on foreign chip manufacturers is more effective in revitalizing the US chip manufacturing industry than directly providing subsidies. This has raised concerns in the industry that the Trump-led US government may try to change the preliminary agreement of the "chip bill." This has also put immense pressure on Biden and other White House officials, as Biden is seeking to reach binding agreements with these chip companies before leaving office.