TSMC, which plans to invest $40 billion in its fab complex in Arizona, is seeking to get up to $15 billion in funding under the U.S. CHIPS and Science Act. Yet, it believes that the funding conditions set by the U.S. government are unacceptable and plans to discuss them with the U.S. authorities. The world's largest foundry believes that obligations to disclose details about fabs and sharing excess profits will discourage chipmakers from building fabs in the U.S., reports the Wall Street Journal.
"Some of the conditions are unacceptable and we aim to mitigate any negative impact from these and will continue discussions with the U.S. government," said Mark Liu, chairman of TSMC, at a conference in Taiwan in late March.
TSMC has already completed building it's Fab 21 Phase 1A in Arizona and is currently moving in equipment with the aim to start making chips there in 2024. The company has already started building another phase of this fab and is committed to investing $40 billion in its Arizona site by 2026. But the world's largest contract maker of semiconductors will need help from the U.S. government as fab costs are rising and it needs to stay competitive with manufacturers that are set to get subsidies, such as Intel.
The U.S. Department of Commerce requires companies seeking subsidies to provide sensitive information, such as projected production capacity, utilization rates, wafer yields, pricing, and profitability indicators like cash flows. This data is needed to enforce the policy of confiscating excess profits but also reveals the competitiveness and trade secrets of chipmakers. Although the Department of Commerce promises to protect these trade secrets, TSMC and other chipmakers worry that such sensitive information could be leaked to U.S. competitors, causing significant damage.
Another objection that TSMC has in mind is profit sharing. TSMC is concerned that the Arizona fabs project's profitability could be limited by government restrictions, and it faces challenges determining the profit of individual factories within a global operation, according to WSJ's sources familiar with the company's discussions with the U.S. administration. Additionally, TSMC is hesitant about the government's requests for extensive access to their records and operations, given the secretive nature of the industry, including confidential client information.
TSMC is not the only company to be concerned about terms and conditions imposed by the U.S. government on companies that apply for CHIPS and Science subsidies. South Korean chipmakers are also unhappy with these requirements and believe that they could lose more than they get.
These firms audit all the publicly-traded companies, in the US and elsewhere, and those doubtlessly have the same sorts of concerns about disclosure of sensitive competitive details.
Large corporations shouldn't get to beg for trillions of dollars of no-strings-attached subsidies and price-gouge customers on top. If you beg for subsidies, you should get price/profit-controlled in one way or another that should eventually refund society for those subsidies.
Any leakage of that information could present serious Strategic Vulnerabilities.
In the end, it'd be better off to not accept the $$$ than deal with the requests.
It's not like you can move a Semi-Conductor Factory after it's built.
Once it's there, it's there.
Then the Large Corporations will probably say "No" to the subsidies if the strings attached are not to their liking.
That's usually how it works.
Better to not have strategic vulnerabilities than to be beholden to another government like that.
We all know how well the US Government "Keeps information Secret" given it's vast amount of leaks of top secret info and personal info in the past 20+ years.
It's a joke that they even remotely "Promise to keep it secret".
They would then, additionally, have to figure out a way to stay in the black and also only produce for companies that will sell only inside the borders.
The government is a massive organization with many different functions and departments. The fact that some parts of the government have had issues at some points in time doesn't mean the entire enterprise is subject to those problems forever onward.
When something needs to get done, I'm sure a mutually-agreeable way can be found.
I wonder if blockchain could be used to hold cryptographic hashes of the detailed reports, which could be retained by the manufacturer for a competitively-relevant time period (e.g. 3 years?). Then, once the time period has elapsed, the report can be released to the government that supplies all the necessary details. If the hash doesn't match or the report doesn't satisfy the terms of the subsidy, they retroactively lose it. That's essentially a blockchain-based version of keeping it in escrow.
I can understand TSMC's complaints, but I do think they're slightly exaggerated. Consider it their opening position, rather than absolute demands. They probably expect to negotiate terms somewhere in the middle.
Welcome to the underbelly of the "free market system".