Taiwan 'Chips Act' to benefit only a few companies

Monica Chen, Hsinchu; Rodney Chan, DIGITIMES Asia 0

MediaTek chairman Tsai Ming-kai spoke at a conference in Hsinchu, Taiwan. Credit: DIGITIMES

The Taiwan government's so-called "Chips Act" will benefit TSMC and a few other major chipmakers, as it does not cover the entire semiconductor ecosystem, according to sources at IC design houses.

Taiwan's parliament in early 2023 passed revisions to the provisions supporting industrial innovation – the so-called Taiwanese version of the US CHIPS and Science Act -- in a bid to beef up the country's competitiveness in the global semiconductor market.

But the passage of the law has upset many in the semiconductor industry. MediaTek chairman Tsai Ming-kai has publicly pointed out the revised provisions do not expand the coverage to all semiconductor segments, and he called for the inclusion of IC design houses.

Sources from the IC design sector said that there is a wide gap between what the Taiwanese "Chips Act" promises and what most others in the semiconductor sector expect. The revised provisions were passed hastily, and the conditions of eligibility for subsidies are seen as tailor-made for just a few major companies, such as TSMC, the sources said. The government failed to consider the suggestions made by various industry sectors, the sources added.

The sources also claimed that the government is treating foreign investors better than domestic ones. Qualcomm was able to reach a settlement with lenient terms in an antitrust lawsuit filed against it by the Taiwanese government, the sources said.

Nvidia and Micron have obtained a total of NT$11.4 billion (US$375.37 million) in subsidies from Taiwan, the sources said. Although the two companies have promised to increase their investments in Taiwan, foreign investors seem to be receiving preferential treatment compared to local ones who often have to compete among themselves for much less, the sources said.

Nvidia's project of setting up an R&D center received a subsidy of NT$6.7 billion, and Micron Taiwan also obtained a subsidy of NT$4.72 billion. Taiwanese IC design houses MediaTek and Realtek previously also applied for government subsidies, and they managed to obtain only NT$100-200 million a year, the sources pointed out.

Other countries have realized the importance of building their own semiconductor ecosystems, thanks to the chip shortages amid the COVID pandemic and US-China trade war. They are providing policy support, tax breaks and subsidies in a bid to boost their home-grown capability in chipmaking and IC design. Semiconductors no longer belong to free trade and they are key to maintaining a country's national strength.

The sources said that if the Taiwan government fails to amend the "Chips Act" again as soon as possible, Taiwan's semiconductor industry will lose its global advantage.

China is giving all-out support for its semiconductor industry, while Korea and Japan are also investing heavily in developing advanced and innovative technologies. The US has also earmarked huge sums to reshore the semiconductor supply chain.

Different countries may be taking different steps, but their target is clear: to boost their semiconductor capability. The sources said that Taiwan offers a wide range of subsidies, but they are not going to where they are actually needed.