CHIPS Act not to affect Taiwan's status in semiconductor industry: MOEA

07/30/2022 03:30 PM
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CNA file photo
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Taipei, July 30 (CNA) The CHIPS and Science Act, a plan to increase the amount of microchips made in the United States, has moved one step closer to being signed into law after it was passed by the U.S. House of Representatives this week, but it is unlikely to challenge Taiwan's critical role as a major global supplier of semiconductors, according to the Ministry of Economic Affairs (MOEA).

Instead, it could help Taiwanese chipmakers by providing them subsidies to build their manufacturing facilities in the U.S., according to the MOEA.

In a statement, the MOEA said Taiwan serves as a global semiconductor manufacturing hub and Taiwanese manufacturers continue to invest in advanced processes here to upgrade technologies, which has made the local semiconductor industry resilient and competitive in the world's market.

The MOEA's statement came after the U.S. House on Thursday passed the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act of 2022 to authorize the government to provides US$52 billion in subsidies to push up domestic semiconductor production, and more than US$100 billion over five years for research and development.

The bill, passed by a rare bipartisan vote of 64-33, has paved the way for U.S. President Joe Biden to sign the legislation into law in a bid to make sure the United States can produce in its own country more of the chips it needs to power a wide variety of products, from computers to automobiles, and so that it can rely less on imports made overseas.

The MOEA's statement indicated Taiwan will continue to be a major exporter of chips, despite soon-to-be increased U.S.-based manufacturing.

"After 50 years of efforts in developing its semiconductor industry through investments and talent cultivation, Taiwan has been on the top of the industry in terms of production efficiency, establishment of a comprehensive supply chain and innovations," the MOEA said. "Taiwan's status as a critical player in the global semiconductor will not be affected (by the Act)."

Taiwan has taken the lead over its peers in semiconductor production with Taiwan Semiconductor Manufacturing Co. (TSMC) as the largest pure play wafer foundry operator in the world, and ASE Technology Holding Co. as the largest IC packaging and testing services provider.

The subsidies are expected to be made available to not only U.S. manufacturers of chips, like Intel, but also foreign companies such as TSMC which set up foundries in the U.S. and make the chips there. They will presumably not only ensure a steady and uninterrupted supply of chips for U.S. consumers but also hire American workers to work in the fabs.

The MOEA said the U.S. is one of Taiwan's most important trading partners and the largest buyer of Taiwan-made chips so the ministry will be glad to see Taiwanese semiconductor firms secure financial resources when they extend their reach to the U.S. markets through investments.

In addition, the MOEA said Taiwan will forge a closer partnership with American information technology communication (ITC) suppliers.

Liu Pei-chen (劉佩真), a researcher at the Taiwan Industry Economics Database under the Taiwan Institute of Economic Research, said the CHIPS Act is expected to lower the financial burden shouldered by Taiwanese semiconductor firms, which are investing or planning to invest in the U.S. markets. They had been strongly nudged by the Americans to do so, starting under the Trump administration.

TSMC is investing US$12 billion to build a 12-inch fab in Arizona using its sophisticated 5 nanometer process.

In a LinkedIn post released earlier this week, TSMC said the Arizona plant had recently celebrated the placing of the last beam on the new facility -- an event known as a "topping out" ceremony, confirming the new plant will start production in 2024 as scheduled.

Taiwan's GlobalWafers Co., the world's third-largest supplier of silicon wafers, announced in June that it is planning to invest US$5 billion to build a silicon wafer plant in Sherman, Texas.

GlobalWafers said it expected the construction of the new plant will begin in November but only if it secures expected subsidies under the CHIPS Act before the Congressional recess in August.

After the passage of the CHIPS Act, the White House issued a statement on Thursday saying that the legislation will make cars, appliances and computers cheaper and lower the costs of every day goods.

It was unclear, however, whether the Taiwanese and other manufacturers setting up fabs in the U.S. will be able to offset the greater cost of producing in the United States, including the higher wages, and whether the higher costs will be passed onto consumers. What has partly made Taiwanese chips competitive is the relatively low cost of hiring engineers here.

The MOEA, nonetheless, pointed out that Taiwan has been a good partner in the global economy and Taiwanese semiconductor manufacturers are willing to help its clients assuage the impact of a supply shortage, including chips used in automotive electronics.

According to the MOEA, international tech giants such as Apple Inc., Intel Corp., Nvidia Corp., and Advanced Micro Devices Inc. are major clients of Taiwan's semiconductor industry, which is able to provide highly efficient goods with a high quality-price ratio.

"Made in Taiwan has become the most efficient production model in the global semiconductor industry," the MOEA said.

(By Cheng Hung-ta, Chang Chien-chung and Frances Huang)

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