On March 4, local time, U.S. President Trump once again criticized the Chip and Science Act (hereinafter referred to as the "Chip Act") signed by Biden when delivering a speech in Congress, saying that the United States' huge subsidies are meaningless and the bill should be abolished. If the "Chip Act" is repealed, major manufacturers such as TSMC, Intel, and Samsung, which are the main beneficiaries, will be greatly affected. Especially for TSMC's continued expansion of investment in the United States, this will lead to a sharp increase in the manufacturing costs of its U.S. factories.
The "Chip and Science Act" is a bill officially signed by former U.S. President Biden at the White House on August 9, 2022, aiming to promote the development of semiconductor R&D and manufacturing in the United States. At the same time, the bill also supports approximately US$52.7 billion in government subsidy funds, as well as large low-interest loans and a 25% tax exemption. About US$39 billion of this amount will be provided directly to semiconductor manufacturers that build factories and expand production in the United States. Before the Biden administration leaves office, the U.S. Department of Commerce has signed formal subsidy agreements with major wafer manufacturing companies such as TSMC and Intel, and some manufacturers have already received the first phase of subsidy funds.
The newly-appointed U.S. President Trump does not approve of the bill. He has repeatedly stated that tariffs should be used to promote foreign semiconductor manufacturers to set up factories in the United States, rather than attracting them through subsidies.
"Taiwan accounts for about 98% of the global chip business... We want them to come back. We don't want to subsidize them billions of dollars like the ridiculous plan (chip bill) implemented by (former President) Biden." Trump said at a meeting in late January this year: "They don't need money, what they need is incentives. And the way of incentives is That is, they don’t want to pay 25%, 50% or even 100% tariffs. They use their own money to build factories, and we don’t have to give them money. Even if we give them money, we don’t know what (they) will do with it.” In Trump’s view, if these semiconductor manufacturers want to stop paying high tariffs, they must build factories in the United States.
On March 4, Trump told House Speaker James Johnson in a speech in the U.S. Congress: "The Chip Act is a terrible thing. We gave tens of billions of dollars to semiconductor manufacturers, but it means nothing. They took our money and didn't spend it. Mr. Speaker, the Chip Act should be repealed and everything that is left, and the remaining money should be used to reduce the national debt or do whatever you want."
It is worth mentioning that House Speaker James Johnson stood up and applauded Trump's speech. Obviously, repealing the "CHIP Act" is not Trump's personal idea.
The latest news also shows that about one-third of the employees of the U.S. Department of Commerce’s office responsible for the disbursement and supervision of the US$39 billion in manufacturing subsidy funds under the "Chip Act" have been laid off this week. Sources said that about 40 employees lost their jobs on Monday, and about 20 employees left last week. This also means that the subsequent implementation of the "Chip Act" will be affected.
On November 15, 2024, the US Biden administration signed a formal agreement with TSMC before stepping down. The US Department of Commerce will provide up to US$6.6 billion in direct funding and US$5 billion in loans to TSMC's Arizona subsidiary under the "Chip Act" to support TSMC's plan to invest US$65 billion in building three wafer fabs in Arizona.
In January 2025, TSMC Chief Financial Officer Huang Renzhao admitted in an interview with the US media CNBC that TSMC had received the first US$1.5 billion "Chip Act" subsidy from the US government in the fourth quarter of 2024. Although Huang Renzhao believed at the time that the newly elected Trump administration would continue to provide the remaining subsidy funds that had been finalized for TSMC's investment plan in the United States, from now on, if the "Chip Act" is repealed, it will become impossible to obtain the remaining subsidy funds.
It should be pointed out that TSMC announced on March 3, local time in the United States, that it would expand its investment in the United States to US$165 billion. This additional US$100 billion of investment is not supported by subsidies. If the previously promised US$6.6 billion in "Chip Act" subsidies cannot be fully paid, then this will undoubtedly lead to a significant increase in the manufacturing costs of TSMC's US wafer fabs.
According to information disclosed by U.S. builder Exyte, although the cost of wafer fab equipment is similar, the cost of infrastructure construction for wafer fabs in the United States is approximately twice that of Taiwan. TSMC founder Zhang Zhongmou has publicly stated before that the cost of manufacturing chips in the United States is 50% more expensive than in Taiwan. Obviously, without the subsidy support of the "Chip Act", the manufacturing cost of TSMC's US wafer factory will undoubtedly be much higher than that of the Taiwan factory.
Semiconductor supply chain people also pointed out that without subsidies, the depreciation cost of TSMC's factory in the United States will be 26% higher than that of the Taiwan factory, and the labor cost will be 66% higher. Even when the wafer factory's capacity utilization reaches 100%, the cost of each wafer (Wafer) produced by the US wafer factory will be about 28.3% higher than that of the Taiwan factory. However, it is not easy for fabs to maintain 100% capacity utilization for a long time. Therefore, the higher costs ultimately need to be shared by customers.
Based on the above reasons, the industry expects that TSMC may increase the price of advanced processes by 15% in the future to reflect the high cost of building factories in the United States and make up for the cost gap between the two places.