TSMC has committed to establish multiple chip fabrication plants in the US, with Apple as a significant customer, backed by subsidies from the bipartisan CHIPS Act. However, Trump has recently labeled the Act as “absurd” and is considering withdrawing the promised funding.
If he acts on this threat, it could cast uncertainty over the sustainability of US chip manufacturing facilities and may lead to the halting of TSMC’s expansion efforts.
‘Made in America’ Apple chips
Apple first disclosed its intention to produce ‘Made in America’ chips back in 2022, an announcement that was celebrated as a notable achievement of the US CHIPS Act. This government-supported initiative aims to reduce reliance on China for advanced chip supplies while creating job opportunities for American workers.
The plan includes the construction of several TSMC chip manufacturing facilities in Arizona, with a portion of production allocated for Apple chips intended for older devices.
A recent report indicated that test production has begun at the first facility, with mass production expected to start soon. A significant portion of the subsidies will be allocated towards developing smaller 2nm chips, targeting production commencement by 2028.
Trump may backtrack on CHIPS Act
Nevertheless, Trump’s recent remarks have cast doubt on these developments. The Financial Times has reported on his statements.
Trump is advocating for taxing semiconductor imports and dismantling an incentive program that would see the US government subsidizing TSMC’s promised $65 billion investment in domestic manufacturing with grants totaling $6.6 billion. […]
“We don’t want to provide them with billions of dollars through this ridiculous program that Biden has,” he stated, positing that foreign chip manufacturers “didn’t require funding, they needed incentives, and the right incentive is to avoid paying a tax of 25, 50, or even 100 percent.” […]
TSMC must persuade Trump to honor the Biden administration’s subsidy agreement, which is crucial for its plans in Arizona.
DMN’s Perspective
Trump’s comments are quite perplexing. He suggests he wants to compel foreign chip manufacturers to set up production in the US while simultaneously threatening to withdraw funding from one that is on the verge of doing just that.
A more charitable interpretation might view this as a negotiation strategy, with Trump aiming to gain additional concessions from TSMC post-agreement. However, given the current climate, it would be challenging for TSMC to place trust in any future commitments from the administration, and the most prudent move might be to abandon expansion plans altogether.
The existing facility represents a sunk cost, ensuring that production there will likely continue. However, TSMC may choose to lower its volume commitments made in exchange for subsidies if those funds are diminished or rescinded.
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