TSMC Deal May Disadvantage US Semiconductor Companies, Senators Say
Three senators are concerned the U.S.’s deal with the Taiwan Semiconductor Manufacturing Company (see 2005150033) may disadvantage U.S. chip companies through unfair subsidies and could allow China access to sensitive technologies. In a May 19 letter to the Commerce and Defense departments, Senate Minority Leader Chuck Schumer, D-N.Y., and Sens. Patrick Leahy, D-Vt., and Jack Reed, D-R.I., urged the administration to stop all negotiations with TSMC regarding plans to build a U.S.-based chip factory. The senators said they have “serious questions” about how the deal, announced last week, aligns with the U.S’s strategy of diversifying its semiconductor supply chain away from China.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The senators are concerned the deal with TSMC may include federal subsidies, tax breaks, licensing deals and other incentives, arguing that the U.S. should be investing in domestic firms, not foreign companies with ties to China. U.S. efforts to reshore semiconductor supply chains should include the “broad semiconductor industry, including with companies that already have built a significant presence in the U.S. and been through a rigorous security screening process,” the senators said, suggesting TSMC products are vulnerable to Chinese acquisition. “An ‘on shore’ fab without such protections defeats the purpose of building a secure domestic production capability.” TSMC did not comment.
Although the State Department called the deal with TSMC a “game changer” for the U.S. semiconductor industry, the senators said the agreement will do little to bolster U.S. competitiveness. “A one-off investment like the proposed TSMC facility is inadequate to rebuilding U.S. manufacturing capacity in microelectronics,” the letter said, “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.”
Speaking with reporters last week, State Department officials said any U.S. incentives provided to TSMC will be available to “other investors and companies in the semiconductor industry.” The “administration’s policies will help make TSMC successful in their investment in the United States,” said Keith Krach, the State Department’s undersecretary for economic growth, energy and the environment. But Krach also said the administration will not provide TSMC with favorable licensing treatment.