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Force TSMC to set up a factory, where is the noisy US “Chip Act” now? | TechNews

In terms of promoting the development of the local semiconductor industry, the United States has once again moved from the quagmire. On July 20, the US Senate passed a preliminary vote of 64 to 34 to pass the “Chip Act”, which covers how the United States will subsidize the domestic semiconductor industry.

The bill is expected to pass the final vote in the Senate this week, and then be voted on in the House of Representatives.

What is the Chip Act?

The full name of the Chip Act is the Creating Helpful Incentives to Produce Semiconductors Act, commonly known as the Chip (CHIPS) Act.

In the beginning, the chip bill was actually wrapped in another larger bill in June 2021, the American Innovation and Competition Act. The competition law was jointly proposed by Democratic Senator Chuck Schumer and Republican Senator Todd Young. It is intended to increase investment in technology and improve the competitiveness of the United States. The world will compete with China, and it will support the domestic semiconductor industry in the United States. ‘s plan.

Competing with China is a bipartisan consensus in the United States, but the bill involves how to avoid investing in companies related to the CCP, and the two parties are debating. Later, the House of Representatives introduced its own version of the Competition Act, which was merged into a new coordination bill, the Bipartisan Innovation and Competition Act. The Senate and the House of Representatives originally wanted to coordinate and pass the bill before the August recess, but failed. Only after Intel and other US semiconductor companies put pressure on it did they push the chip bill alone.

What is the content?

The chip bill is about $54 billion to subsidize increased U.S. domestic production of semiconductors, reduce U.S. dependence on other countries, and curb the threat of China’s semiconductor industry. The known subsidy content includes $39 billion to subsidize semiconductor companies to build fabs in the United States; $11.2 billion to subsidize domestic semiconductor research and development in the United States.

If overseas players such as TSMC set up factories in the United States, they can get a 25% tax reduction to purchase fab equipment.

However, the subsidy also has a denial. The “Wall Street Journal” reported that the subsidized industry will not be allowed to build factories in China or other unfriendly countries for 10 years, or expand advanced manufacturing processes. U.S. players such as Intel are lobbying lawmakers to ease subsidies for companies that do business with China. But geopolitical considerations hold little hope.

Who are the main beneficiaries of the Chip Act?

Intel is the biggest beneficiary of subsidies, and 52 billion is expected to be given to it if more than 20 billion. So when there was no progress on the chip bill in June, Intel deliberately postponed the groundbreaking ceremony of the Ohio fab and threatened to invest more money in Europe.

That’s another reason the chip bill has been stuck for so long. Because the chip bill is unique to fab companies such as Intel, Micron, and Texas Instruments, IC design companies that outsource foundry such as AMD, NVIDIA, and Qualcomm can only stare blankly, complaining that the bill makes competition unfair.

The US IC design industry supports the “Facilitating American-Built Semiconductors Act” (FABS) proposed by the House of Representatives, which will subsidize both fabs and chip designers.

Can the Chip Act Really Help America?

This problem can be divided into two levels, one is to improve the competitiveness of the US semiconductor industry, and the other is to improve the risk of US chip disconnection.

On the first level, many experts are not very optimistic. This is mainly because even if the scale is 52 billion US dollars, it is less than the investment of a single semiconductor industry. For TSMC, it will invest 100 billion US dollars in three years. Rakesh Kumar, a professor of electrical engineering at the University of Illinois at Urbana-Champaign, said that companies can apply for up to $3 billion in subsidies to set up factories in the United States, but it is not enough to encourage them to move their supply chains to the United States as well.

Beyond that, the Wafer Act doesn’t change the fact that the U.S. is not a suitable place to manufacture. “Fortune” reported that Taiwan, China, South Korea and other Asian countries, the cost of producing chips is 25% to 40% lower than the United States. If the United States wants to revive the glory of semiconductor manufacturing, it may take hundreds of billions of funds and decades to catch up.

However, from the perspective of reforming the supply chain, the United States has successively invited TSMC and other companies to set up factories, and passed the chip bill, which can reduce the vulnerability of chip chain disconnection. Shay Luo, director of the American consulting firm Kearney, analyzed that the funds provided by the bill are “a game of service level, not a game of cost”, which can allow Intel and other industries to shorten the supply chain and reduce the damage of chain interruption.

The impact on Taiwan factories?

In view of the above-mentioned challenges facing the United States, Taiwanese manufacturers such as TSMC need not worry about falling into a disadvantage.

Liu Peizhen, researcher and director of the Industrial and Economics Database of the National Taiwan Academy of Economics, told “Central News Agency” that Taiwan still has a competitive advantage. TSMC’s advanced processes below 10 nanometers account for 63% of the world’s total, and the mature process capacity is also the world’s largest, accounting for about 20%. It is expected that under the changing global environment, Taiwan still has room to play.

Gillian Tett, editor-in-chief of the Financial Times, also admitted that even if the chip bill is passed, it will be difficult for the United States to “autonomize chips” in the short term.

Perhaps what Taiwan factories should worry about most is the poaching of semiconductor talents. Eightfold.AI, an AI company, estimates that if 20 new factories are built in the United States, it will require 50% less manpower than existing ones. An analysis by Georgetown University in the United States suggests that the United States should grant visas to thousands of Taiwanese and South Korean semiconductor talents in order to make the American semiconductor industry operate smoothly.

(Author: Zhang Fangyu; this article is reproduced with permission from Business Week; the source of the first image: shutterstock)

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