Report: Taiwan Semiconductor considers returning funds to the U.S. government to avoid "subsidies for shares"

Free "subsidy funds" suddenly turned into "subsidies for shares"? Taiwan Semiconductor may not agree.

The Trump administration is considering holding equity in companies that receive funding from the CHIPS Act, raising concerns in the industry. According to a report by The Wall Street Journal on Thursday, executives at Taiwan Semiconductor Manufacturing Company (TSMC) have had preliminary discussions about potentially returning subsidies from the Trump administration to avoid the government becoming a shareholder.

The report cites informed sources stating that in light of the Trump administration's possible demand for equity, TSMC executives have had initial discussions about returning the subsidy funds. TSMC previously received up to $6.6 billion in subsidies to build a large manufacturing facility in Arizona.

TSMC may choose to return subsidies

A previous article by Wall Street Watch mentioned that following Intel's plan, U.S. Secretary of Commerce Gina Raimondo is exploring how to gain more equity in chip giants through CHIPS Act funding.

The U.S. government finalized subsidies for Samsung, Micron, and TSMC at the end of last year, but most of the funds have not yet been disbursed, leaving room for the Trump administration to reset conditions. Analysts point out that if the equity-for-subsidy model is fully implemented, it would make the U.S. government a significant shareholder in major global chip manufacturers.

As free funds turn into "subsidies for shares," TSMC is quickly preparing a response strategy.

Media reports citing informed sources indicate that TSMC executives have had preliminary discussions about potentially returning government subsidies to avoid the government becoming a shareholder. TSMC's factory in Arizona is set to begin producing advanced chips by the end of 2024, and the company agreed to build the plant under pressure from the Biden administration.

Sources familiar with TSMC's thinking indicate that the company has never seriously relied on financial support from the U.S. government. The $6.6 billion in subsidies TSMC received is for building a massive manufacturing facility in Arizona, but the company may prefer to forgo these funds to maintain operational independence.

However, regarding this news, a government official clarified on Thursday that the Trump administration is not seeking to hold shares in companies like TSMC and Micron that are increasing their investments, but is only considering equity arrangements for companies that have not raised their investment commitments.

It is reported that any efforts to convert CHIPS Act subsidies for companies like Intel into equity may face legal challenges, as the terms of previous agreements have already been established. The act requires sharing profits above a certain level with the government.

The CHIPS Act was initially conceived during Trump's first term to attract manufacturers like TSMC to the U.S. and compensate for higher manufacturing costs. The implementation of the plan has been slow, and uncertainties brought about by government changes and tariff tensions have affected its effectiveness