Thursday, 21 May 2020 10:58

Democrats question what incentives US has promised TSMC to invest Featured

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Democrats question what incentives US has promised TSMC to invest Image by Gerd Altmann from Pixabay

Three US senators from the Democratic Party have asked the federal government to disclose what incentives it has promised to the Taiwan Semiconductor Manufacturing Company to get the company to set up shop in the US.

In a letter sent to Defence Secretary Mark Esper and Commerce Secretary Wilbur Ross, the trio — Charles Schumer of New York, Jack Reed of Rhode Island and Patrick Leahy of Vermont — said while they strongly supported efforts to strengthen the country's microelectronic supply chain, they wanted to know how the TSMC deal took national security considerations into account.

TSMC, the world's biggest contract chip manufacturer, announced last Friday that it would set up a factory in Arizona, at a cost of about US$12 billion.

The three politicians said in their letter they wanted to know how the administration's move "aligns with a broader strategy for building a diverse US semiconductor manufacturing supply chain".

"We ask that you cease any such negotiations or discussions until you have briefed the relevant authorization and appropriations committees with your plans, including any commitments you have made to funding, tax breaks, licensures, or other incentives," they added.

Once TSMC sets up shop in Arizona, all three companies that can make the latest semiconductors — Intel, Samsung and TSMC — will have factories in the US.

The government's overtures to TSMC are one more move in its ongoing tussle with China, with this particular move aimed at Chinese telecommunications equipment vendor Huawei Technologies.

Huawei gets about 98% of its chips from TSMC. The government has also tightened rules to prevent the Chinese company from being supplied by TSMC, making changes in the US Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software, or made using American equipment.

Until now, Huawei, which was placed on a US blacklist a year ago, was obtaining American products from branches of US companies outside the country, using a loophole that allowed it to buy any product which has less than 25% of American-produced content.

A more recent tightening of the rules would also cover chips sent directly to Huawei's customers. As it stands, it covers only chips ordered by Huawei.

Schumer, Reed and Leahy said the TSMC move seemed more about creating jobs in the US, rather than building up a facility that had been screened thoroughly to meet US national security standards and geared towards bettering the microelectronics supply chain.

"We also want to stress that a one-off investment like the proposed TSMC facility is inadequate to rebuilding US manufacturing capacity in microelectronics, which is essential to our national and economic security. Unfortunately, there is no evidence that the administration has a comprehensive, integrated plan for achieving this," they wrote.

"While reporting indicates that a different part of the government, within the Defence Department, has been in separate discussions with Intel on broadening access to domestic semiconductor production, a comprehensive plan should also include working with other industry leaders like Micron, GlobalFoundries, and Cree, among others, that have significant investments already in US facilities, in order to develop the R&D and workforce capabilities and diverse manufacturing supply chain required for US leadership in semiconductor manufacturing."

Thanks to The Register for a link to the letter.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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