TSMC's dream of building overseas factories was realized ahead of schedule in Japan.
On April 6th local time, Japanese Prime Minister Fumio Kishida inspected TSMC Kumamoto factory. This is TSMC's first factory in Japan, and the Japanese government has provided huge subsidies for this new factory. Fumio Kishida also stated that he will "unprecedented" support the development of the semiconductor industry.
In contrast, the US factory construction plan, which was announced more than a year earlier than the Japanese factory, is still being postponed. In January of this year, TSMC announced that the construction of its first factory in Arizona, USA will be delayed until mass production in 2025, and the operation of its second factory will be delayed until 2027 or 2028.
Apart from TSMC, chip giants such as Samsung and Intel have also failed to smoothly advance their plans to build factories in the United States.
According to The Wall Street Journal, Intel delayed its plan to invest $20 billion in building a factory in Ohio due to delayed US government subsidies. The South Korean newspaper Minzu Ilbo revealed that Samsung has also been in various negotiations with the US government to obtain factory construction subsidies.
In August 2022, Biden signed the Chip Act, proposing up to $52.7 billion in subsidies for semiconductor research and development, manufacturing, and labor development in the United States, as well as various supportive policies.
But more than a year after the bill was introduced, the US government did not provide the promised subsidies or benefits to chip giants, and instead rumors spread that they were "fooling the past in various ways.".
The path of chip giants building factories in the United States has encountered varying degrees of resistance. This raises doubts from the outside world whether Biden's so-called chip strategy was "lonely" before this year's US election.
Difficulty in obtaining subsidies
Since the Biden administration introduced the Chip Act, global semiconductor companies have announced plans to build factories in the United States, hoping to receive huge subsidies from the US government and expand their global presence.
These grand factory construction plans include but are not limited to: TSMC investing $40 billion in a factory in Arizona, Intel investing $20 billion in a factory in Ohio, and Samsung planning to invest $17.3 billion in a factory in Texas.
However, the United States has raised the threshold for subsidies several times, which has left these chip giants feeling exhausted. In addition, local labor and construction costs are constantly rising, and the construction plan has never been smoothly advanced.
The first subsidy under the Chip Act was announced in December last year, worth $35 million, and was granted to BAE Systems for the production of fighter chip factories. The second subsidy was released in January this year, providing $162 million to Microchip Technology; Subsequently, the US Department of Commerce announced that it will provide $1.5 billion in subsidies to Greenchip for investment and expansion of new factories in New York and Vermont. The final agreement will be finalized after on-site investigations, and funds will be phased in as the investment progresses.
However, subsidies from other chip giants have yet to be fully implemented.
The Chip Act stipulates that if a company obtains excess profits, it must share the profits with the US government, but the maximum profit sharing will not exceed 75% of the total subsidy amount. In addition, there are more stringent conditions, such as restrictions on expanding factories in China and the need to submit detailed financial reports.
In response, US Commerce Secretary Raymond stated that chip companies have requested approximately $70 billion in federal funding. These companies include Intel, TSMC, and Samsung Electronics, and she emphasized that due to limited funds, it is necessary to first meet national security goals.
It was not until February and March that the US government gradually announced that Intel would receive over $10 billion in subsidies, and TSMC would receive $5 billion in subsidies. Samsung has also reached a preliminary agreement with relevant departments and is expected to receive a subsidy of $6 billion.
The allocation of these subsidies remains to be discussed, and Bloomberg pointed out that "it is uncertain where these subsidies will be implemented.".
But even if the government announces the subsidy amount, it does not mean that chip giants can smoothly obtain this money.
For example, on March 11th, the US government began allocating funds to Intel, but not in full of over $10 billion. Instead, it temporarily allocated $3.5 billion, of which $1 billion was borne by the US Department of Commerce and $2.5 billion was funded by the US Department of Defense for a period of three years, mainly producing defense and intelligence related semiconductor products.
However, within a few days, the Pentagon stopped working and cancelled the plan before the funding deadline. The US government can only instruct the Department of Commerce to use other funds from the Chip Act to offset the balance.
The $2.5 billion funding is all playing tricks on each other, and when the so-called over $10 billion subsidy will be in place can only be a question mark.
Building a factory is more difficult
In addition to inadequate subsidies, chip giants also face many difficulties.
For example, TSMC's factory in Arizona, although started construction in April 2021, encountered many difficulties in the early stages of construction.
According to the Financial Times, in the United States, chip manufacturers typically outsource construction work in three parts. In order to save costs, TSMC generally divides its construction work into more than 20 parts and outsources them to different contractors, which leads to a lot of friction between contractors. In addition, due to a lack of skilled workers, the construction progress of the factory has not been able to proceed as scheduled, and can only be postponed multiple times.
After months of negotiations, the two sides finally reached an agreement in December last year, and TSMC made concessions by promising to hire and train workers in Arizona.
At the same time, TSMC could not recruit enough skilled technicians to install advanced machinery and equipment in the United States, so it had to send 500 more professionals from Taiwan, China to assist. Some professionals believe that the real challenge may lie ahead, and American factories may not be able to operate as efficiently as local factories in Taiwan, China.
Not only TSMC, but Intel's factory in Ohio is also in urgent need of construction workers. Due to many ongoing projects near the factory, including the Hilton Hotel, Ohio University Medical Center expansion, Google and Amazon data centers, each project is competing for capable construction workers.
This undoubtedly increases Intel's labor costs. The head of the local construction industry committee previously stated that the annual salary of skilled construction workers has increased to 125000 US dollars (about 900000 yuan), but there is still not enough recruitment.
Samsung is also facing the problem of increased costs. According to data from the US Bureau of Labor Statistics, as of the end of 2023, the cost of new construction projects in the United States has skyrocketed by about one-third compared to three years ago. For Samsung, this means it will bear a greater financial burden, and professionals predict that it may incur an additional $8 billion in factory construction costs compared to the original plan.
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