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TSMC receives huge subsidies from China

2024-08-25

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TSMC has expanded its global layout and received strong support from governments in Japan and other places. In the first half of this year, it received nearly NT$8 billion in subsidies from the Japanese and Chinese governments. According to statistics, TSMC has received a total of NT$62.5 billion in subsidies from the Japanese and Chinese governments.

According to TSMC’s financial report,TSMC's Japanese subsidiary JASM and Nanjing subsidiary have obtained subsidies from the Japanese and Chinese governments as they plan to set up factories in Kumamoto and Nanjing respectively. The subsidies will mainly be used to subsidize the purchase costs of real estate, factory buildings and equipment, as well as part of the costs and expenses incurred in building factories and production operations.

TSMC pointed out that it received approximately 7.051 billion yuan in subsidies from the Japanese and Chinese governments in 2022, 47.545 billion yuan in government subsidies in 2023, and another 7.956 billion yuan in government subsidies in the first half of this year; a total of 62.552 billion yuan in subsidies was obtained.

In recent years, countries around the world have regarded semiconductors as important strategic materials and have competed to subsidize the development of the semiconductor industry. TSMC's technology is leading the world and has become the target of governments to invest and set up factories. TSMC has successively built factories in Kumamoto, Japan and Arizona, USA, and expanded its 28nm production capacity in China.

TSMC held a groundbreaking ceremony for its European Semiconductor Manufacturing Company (EMSC) in Dresden, Germany on the 20th, starting the initial land preparation phase for building a semiconductor wafer factory.TSMC's global layout has expanded from the United States, China and Japan to Europe.

The groundbreaking ceremony of ESMC was presided over by TSMC Chairman Wei Zhejia, and German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen attended the ceremony and announced that the European Commission had approved a 5 billion euro German subsidy measure in accordance with EU state aid rules to demonstrate its support for ESMC.

TSMC's Xiongben plant is progressing the fastest. The first wafer factory will mass produce 12nm, 16nm, 22nm and 28nm process technologies in the fourth quarter of this year, and the second wafer factory is expected to mass produce 6nm, 7nm, 12nm, 16nm and 40nm process technologies in 2027.

TSMC's first wafer fab in Arizona will start mass production of 4nm process in the first half of 2025, the second wafer fab is expected to start mass production of 2nm process in 2028, and the third wafer fab will be built using 2nm or more advanced process technology.

In April this year, the U.S. Department of Commerce announced that it would provide TSMC with a $6.6 billion subsidy to build an advanced wafer fab in Arizona. TSMC has not yet received the U.S. government subsidy.TSMC does not make any predictions about future government subsidies.

As TSMC expands its global layout, all parties are paying close attention to the impact of rising costs. TSMC plans to respond through strategic pricing, ensuring government support, and leveraging its leading manufacturing technology and large-scale manufacturing base advantages. It is confident that it will achieve its long-term gross profit margin goal of more than 53%.