“Taiwan Semiconductor Manufacturing Co. has achieved early production yields at its first plant in Arizona that surpass similar factories back home, a significant breakthrough for a US expansion project initially dogged by delays and worker strife,” Bloomberg reports.
A win for the CHIPS Act? Not so fast.
- TSMC announced its intention to invest $12 billion in constructing the Arizona facility in May 2020. That was over a year before the CHIPS Act was introduced, and over two years before it became law.
- TSMC was first interested in expanding to Arizona in 2013, when then-governor Jan Brewer visited Taipei. Arizona has been cultivating its relationship with Taiwan for decades, with Phoenix becoming a sister city with Taipei in 1979 and Arizona opening a trade office in Taiwan in 1987. Arizona senator Barry Goldwater sued President Carter in 1978 when he reneged on the U.S. treaty with Taiwan, alleging it was unconstitutional for Carter to do so. That was in the context of Carter opening up relations with communist China, an issue on which Goldwater, as an ardent anti-communist, had opposed both Nixon and Carter.
- TSMC has not received funding from the CHIPS Act so far. Bloomberg notes that it is “in line to win $6.6 billion in government grants and $5 billion in loans,” along with tax credits, but not one cent of that has actually arrived in TSMC’s bank account.
- The bigger projected beneficiary of the CHIPS Act, Intel, is in very rough shape at the moment. The company has already said it is cutting 15,000 jobs, which is 5,000 more jobs than it expected to add with CHIPS Act funding. Intel is also looking at selling some of its holdings in other companies as part of a corporate overhaul.
Though TSMC’s Arizona success is not a victory for the CHIPS Act, it is a victory for allowing corporations based in allied countries to invest in the U.S. economy — something politicians are currently in the process of blocking in the steel industry.
To the extent that politicians deserve any credit for TSMC’s results at this point, it is for embracing globalization, standing up to communism, and making Arizona a business-friendly state, not for passing corporate welfare. But the credit should really go to the people making the semiconductors.