TSMC receives NT$47.5 billion in subsidies from China, Japan in 2023

Taipei, March 9 (CNA) Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, received NT$47.55 billion (US$1.51 billion) in subsidies from China and Japan in 2023 for investing in those countries, according to company data.

The subsidies were sharply higher than in 2022, when they totaled around NT$7.5 billion, reflecting the fact that many countries covet TSMC's technology and are eager to attract TSMC chip production.

The subsidies in 2023 were handed out to support the expansion or building of new facilities in Nanjing, China and Kumamoto, Japan and were used to finance land and equipment purchases and fund day-to-day operations.

In China, TSMC is expanding a 12-inch wafer fab in Nanjing that makes chip using mature 16 nanometer and 28nm processes.

In Japan, TSMC opened a plant in Kumamoto on Feb. 24 through its joint venture -- Japan Advanced Semiconductor Manufacturing (JASM). It will be the most advanced wafer fab in Japan when it begins commercial production in late 2024 using the 12nm, 16nm, 22nm and 28nm processes.

TSMC is planning to build a second wafer fab in Kumamoto, with construction slated to start at the end of 2024 and mass production scheduled for the end of 2027. It will use mature 40nm process and the advanced 6nm and 7nm processes.

Together with JASM's first fab, JASM will invest more than US$20 billion in the projects, TSMC said, adding that it had strong support from the Japanese government.

On Feb. 24, Japan's Economy, Trade and Industry Minister Ken Saito announced that the Japanese government would grant 732.0 billion Japanese yen (US$4.97 billion) to JASM to build the second fab in Kumamoto.

Along with a subsidy of 476.0 billion yen for the first fab in Kumamoto, the Japanese government's total grants to TSMC will top 1.2 trillion yen.

While TSMC did not break down the subsides it received from China and Japan in 2023, analysts said the sharp increase during the year largely resulted from the grants going to the first fab in Kumamoto.

According to TSMC, JASM's chips will be used in the production of automotive, industrial, consumer and high performance computing (HPC)-related applications.

Elsewhere, TSMC is investing US$40 billion to build two advanced wafer plants in the U.S. state of Arizona.

A report from Bloomberg cited sources as saying Friday that TSMC is set to secure more than US$5 billion in federal grants to support its investments in Arizona, much lower than the subsidies planned by Japan.

The report said the grants have not been finalized, and so it was still unclear whether the Taiwanese chipmaker will tap into the loans and guarantees on offer from the Chips and Science Act (CHIPS Act) signed by President Joe Biden into law in August 2022.

TSMC did not comment on the report.

According to Bloomberg, several chipmakers, including TSMC, Intel, Samsung and Micron, are in discussions with the U.S. government for about US$28 billion in subsidies for sophisticated facility investments through the CHIPS Act.

U.S. officials were aiming to announce grants to major chipmakers by the end of March, the report said. To date the U.S. government has unveiled three grants to companies that roll out older-generation semiconductors.

For TSMC, the first fab in Arizona is scheduled to start mass production in 2025, using the advanced 4nm process, a year behind schedule.

Its second fab is slated to begin commercial production in 2027, instead of 2026 as previously planned, using the 3nm process.

TSMC is also planning to build a wafer fab in Germany to produce chips using the 12nm, 16nm, 22nm, and 28nm processes for automotive electronics applications and specialty industrial devices, and it is scheduled to open in 2027.

Reports in Germany have recently said TSMC could receive up to 5 billion euros (US$5.47 billion) in grants for the new plant from the German government, almost half of the total investment.