TSMC Considers Returning U.S. CHIPS Act Grants, Implying President Trump’s ‘Subsidy-for-Equity’ Model Lacks Value

TSMC, the prominent Taiwanese semiconductor manufacturer, is reportedly contemplating the return of its CHIPS Act grants to the U. S.government, amid emerging discussions about equity stakes in the company.

Potential $6.6 Billion Refund of CHIPS Act Subsidies by TSMC

The context of this situation lies in the Trump administration’s consideration of acquiring equity stakes from firms benefiting from the CHIPS Act, which includes leading players such as TSMC, Intel, Micron, and Samsung. The government perceives the Biden-era incentive framework as a mechanism for distributing ‘free money’ and now seeks returns from these companies. According to a Wall Street Journal report, TSMC’s executives are weighing the option of returning approximately $6.6 billion in CHIPS Act grants to circumvent the proposed equity model.

Concern regarding potential U. S.government ownership has been openly discussed among TSMC’s leadership, primarily due to the firm’s history of operating in the U. S.with internal resources. Taiwanese media has even characterized this threat as the initial step towards the ‘nationalization’ of TSMC, underlining significant pressure on the semiconductor titan. To mitigate this potential scenario, TSMC is now exploring the return of the substantial subsidies allocated for its Arizona manufacturing facility.

Rapidus semiconductor facility in Japan aiming for 2nm chip mass production by 2027 amid competition from TSMC and Samsung — Image Credits: TSMC

The Wall Street Journal report further noted that U. S.officials are not inclined to pursue equity stakes in companies that are actively investing domestically. Given TSMC’s commitment to investing ‘hundreds of billions’ in U. S.manufacturing, the chances of the company conceding equity appear minimal at this time. This ‘subsidy-for-equity’ approach seems more applicable to companies like Intel that are facing challenges and may require governmental support to enhance their market standing or negotiate effectively with other technology firms.

The future relationship between TSMC and the Trump administration remains to be seen, especially in light of their increasingly cooperative interactions over recent months. Both parties are likely to favor agreements that do not jeopardize their growing partnership.

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