Milestone in "Chip Manufacturing Returning to the U.S.": Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) Factory Subsidies Set to Be Distributed Soon

2017 After a series of arduous negotiations and approval processes in the US Congress, the Biden administration has finally finalized subsidy measures under the "Chip Act" specifically for the "king of chip manufacturing" Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US). The high subsidies to support Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in building factories in the US will be disbursed this year, marking a milestone in the ambitious blueprint of the Biden administration to bring chip manufacturing back to the US. According to a statement from the US Department of Commerce on Friday, as an important part of the contract agreement, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR will receive a direct allocation subsidy of $6.6 billion. Although this amount was disclosed earlier this year as part of a preliminary agreement, the agreement now has legal binding, making Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR the first recipient of this final stage of the US "Chip Act" subsidy. In addition to the $6.6 billion direct allocation subsidy, US government officials stated that this chip manufacturer from Taiwan will also receive phased special loans of up to $5 billion, and due to reaching certain important benchmarks, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR will receive at least $1 billion in loans this year. US Secretary of Commerce Gina Raimondo stated in a press conference that the finalization of the subsidy agreement for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's factory construction in the US will ensure that cutting-edge chip manufacturing returns to the US, keeping critical capabilities in the country. "This is one of the most sought-after cutting-edge technologies globally," she said. "Its importance cannot be overstated for both US national security and economic security." According to sources cited by the media, more subsidy agreements will be finalized in the coming weeks, involving many chip manufacturing giants such as Intel Corporation, Samsung, SK Hynix, and Micron, consolidating one of the largest-scale high-end manufacturing industry policies in the country for decades, and marking a milestone legislative achievement for the outgoing Biden administration. It is understood that the US Congress passed the "Chip Act" in 2022, and under this law, "chip manufacturing company factory subsidies in the US" will include: $39 billion in direct allocations, $75 billion in loans and loan guarantees, and up to 25% tax exemptions - all aimed at attracting chip manufacturing back to the US after decades of it moving to South Korea and Taiwan. While most of the funds have been allocated, only a portion of it is "set in stone", including a small grant announced in September. In the case of the subsidy for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, this funding will be used to support over $65 billion in spending for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR to build three large chip manufacturing plants in northern Phoenix, Arizona. Additional funding will be released as chip companies meet further goals. According to the US Department of Commerce, this project represents the largest-ever foreign direct investment by a chip company in a new location abroad. Reports suggest that officials in the Biden administration face increasing pressure, with chip manufacturers and some state governments urging them to complete negotiations and disburse subsidies quickly. Media reports have stated that projects in four states - Ohio, New Mexico, Oregon, and New York - meet the funding conditions of the "Chip Act", and business groups in these states have urged the immediate disbursement of these funds in a recent letter to President Biden. Three of these states have projects for the construction of large chip factories by Intel Corporation, whose CEO has expressed disappointment in the process. Intel Corporation is facing serious business challenges, making negotiations for the "Chip Act" complex. This long-standing American chip manufacturer is still studying the substantive terms of the contract, including what would happen if the company divests its manufacturing business or is partially or fully acquired. Former President Trump publicly criticized the "Chip Act," and chip manufacturers hope to avoid dealing with the new administration President-elect Donald Trump is poised to return to the White House in January, increasing the urgency of these efforts. While chip companies are not concerned that the "Chip Act" will end due to pressure from Trump, as the bill has already been approved by both the House and the Senate, tech giants such as Intel Corporation, Samsung, and Micron are still eager to avoid the possibility of having to renegotiate terms with the Trump administration. The "Chip Act" aims to stimulate economic activity in the US high-end manufacturing industry and maintain national security, passing in the US Congress with bipartisan support. US officials stated that the final agreement will not be rushed before the transfer of power takes place, and efforts will be made to announce it immediately after reaching an accelerated agreement. The push to bring chip manufacturing back to the US has been a major goal that President Biden has been vigorously promoting since taking office, considering it as a significant political achievement. According to data from the American Semiconductor Industry Association, the US has lost its leading position in the global high-end chip market since 2017. Therefore, the Biden administration believes that re-attracting chip manufacturing to the US will not only bring economic and employment opportunities but also safeguard the country's technological leadership and national security.According to the Semiconductor Industry Association (SIA) statistical data, the United States' share of global semiconductor manufacturing capacity has decreased from its peak of 37% in 1990 to only 12% in 2020. Therefore, Biden has made reshoring chip manufacturing back to the US one of the most important tasks during his term.According to reports, Donald Trump, who was just announced as the winner, recently strongly criticized the "chip bill". He stated that imposing tariffs on foreign chip manufacturers is more effective in revitalizing the U.S. chip manufacturing industry than providing direct subsidies. This has raised concerns in the industry that the U.S. government under Trump's leadership 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. The yield rate of chips in newly-built factories in the United States actually exceeds that of Taiwan's factories. In 2022, the U.S. Congress passed the "Chip and Science Act", which aims to help chip companies build more chip factories in the United States. The ultimate goal of the Act is to once again make the United States the strongest chip manufacturing country and accelerate the "chip manufacturing reshoring to the United States" desired by the U.S. government. With the recent announcement of the first large chip factory in the United States by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in Arizona, the chip yield rate of the factory has made significant breakthroughs, and the process technology is at the 4nm level, one of the highest-end processes of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, second only to the 3nm level. It seems that "chip manufacturing reshoring to the United States" is no longer just a slogan. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's third factory in the United States may focus on 2nm and even more advanced processes in the future. Chip yield rate is the ratio of usable chips produced in the manufacturing process, and this indicator is a key factor in evaluating chip manufacturing efficiency. Yield rate directly affects the economic benefits of chip factories because it determines how many chips that meet official commercial standards can be produced from each wafer. Specifically, in the early chip manufacturing activities of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's factory in Arizona, the yield rate is even 4 percentage points higher than similar factories in Taiwan, which is a very important development. As the improvement in yield rate means that more chips can meet commercial standards, it can help chip factories significantly reduce production costs and enhance profitability comprehensively. This breakthrough achievement can be considered a significant milestone in the progress made by the U.S. government in revitalizing the U.S. chip manufacturing industry and promoting the "chip manufacturing reshoring to the United States" initiative. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is the core chip manufacturing partner for U.S. tech giants such as NVIDIA Corporation, AMD, Broadcom Inc., and Apple Inc., controlling almost all chip production in the entire U.S. tech industry.