TSMC agreed to build a series of chip plants in the US, with Apple a key customer, using subsidies provided by the bipartisan CHIPS Act. Trump has now called the Act “ridiculous” and wants to renege on the promised funding.
If he followed through on the threat, it could throw into doubt the viability of the US chipmaking plants, and lead to cancellation of TSMC’s expansion plans …
‘Made in America’ Apple chips
Apple first announced its plan for ‘Made in America’ chips back in 2022, with the news hailed as one of the success stories of the US CHIPS Act. This is a government subsidy program intended to free the US from dependence on China for advanced chip supplies and to generate jobs for US workers.
The initiative will see a series of TSMC chipmaking plants built in Arizona, with some of the production reserved for Apple chips for older devices.
A report last month suggested that test production is well underway at the first plant, with mass production not far away. A sizeable chunk of the subsidies are set to be used to establish production of smaller-process 2nm chips, starting from 2028.
Trump may renege on CHIPS Act
However, these plans have now been thrown into doubt by comments made by Trump. The Financial Times reports on his remarks.
Trump wants to tax imported semiconductors and dismantle an incentive scheme under which Washington agreed to subsidise TSMC’s pledged $65bn investment in US production capacity with grants worth $6.6bn […]
“We don’t want to give them billions of dollars like this ridiculous programme that Biden has,” he said, adding that foreign chipmakers “didn’t need money, they needed an incentive, and the incentive is going to be, they’re not going to want to pay a 25, 50 or even 100 per cent tax” […]
TSMC has to convince Trump to honour the Biden administration’s subsidies deal, which it needs to make its Arizona investment plans feasible.
9to5Mac’s Take
Trump’s comments clearly make no sense. He’s saying he wants to force foreign chipmakers to establish production in the US, while threatening to remove funding from one which is about to start doing just that.
The kindest interpretation would be that it’s a negotiating tactic, with Trump hoping to extract further concessions from TSMC after the deal was done. But at this point it would be hard for TSMC to trust anything the current administration offers in return, and the safest bet would be to cancel plans for expansion.
The existing plant is a sunk cost, so production will almost certainly proceed there, but the chipmaker will likely reduce the volume commitments it made in return for the subsidies if they are reduced or withdrawn.
Photo by Laura Ockel on Unsplash
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