U.S. officials sent to Taiwan to hear chip industry’s subsidy concerns

Taiwan Economy Minister Wang Mei-hua

31st March 2023 – (Taipei) Taiwan Economy Minister, Wang Mei-hua, announced on Friday that the United States has sent officials to Taiwan to hear the concerns of the island’s chip industry regarding the criteria for new US semiconductor subsidies. The move follows the announcement by South Korean President Yoon Suk-yeol on Thursday that the conditions were troubling companies like Samsung Electronics Co and SK Hynix Inc, as well as Taiwan’s TSMC.

Industry sources have said that the criteria include sharing excess profits with the U.S. government, a requirement that could expose confidential corporate strategy during the application process. Wang acknowledged that there was a “direct connection” between the rules and company investments and operating costs, but added that the rules were still in a 60-day comment period.

According to Wang, “The U.S. side has sent relevant officials to Taiwan to listen to the industry’s opinions, to collect their views.” However, she did not provide any further details. Wang also assured that if the industry needed assistance in communicating with the United States, the Economy Ministry would provide support.

“We hope these technical details do not let the industry feel like there is a rather large disparity with their cost plans,” said Wang. She added that the Economy Ministry was committed to ensuring that the subsidies did not create undue burdens for the industry.

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, is investing US$40 billion in a new plant in Arizona, supporting Washington’s plans for more chip-making at home. The subsidies would come from a US$52 billion pool of research and manufacturing funds earmarked under the United States’ CHIPS Act, which aims to boost chip-making in the country.

The U.S. Department of Commerce has announced guides and templates for the CHIPS Act this month. The department will protect confidential business information, and a Department of Commerce official stated that the requirement to share excess profit would only occur where projects significantly exceeded projected cash flow.