As the US presidential election heats up, speculation is swirling about whether former President Donald Trump, if re-elected, would cut off subsidies for TSMC's Fab 21 in Arizona. Industry insiders report that TSMC is actively conducting scenario analyses regarding Trump's potential return to the White House.
The competition in the US presidential race has intensified recently. Observers, including those from The Economist, believe that Trump's chances of winning are on the high end, introducing significant uncertainty into Taiwan's industry operations.
Although Trump has not explicitly indicated that he would cancel the US$6.6 billion subsidy under the CHIPS and Science Act (CHIPS Act) for TSMC, it may be challenging for him to adhere to the legislative rules established by Congress under the Biden administration.
Trump has vocally opposed military spending related to NATO and South Korea multiple times. His previous claims demanding "protection fees" from Taiwan seem to echo similar demands made to NATO and South Korea. If Trump seeks to garner support from voters by challenging larger geopolitical concerns, as a private enterprise, TSMC would be deemed much less significant in his eyes.
This raises the possibility that Trump could "adjust" the US Department of Commerce's CHIPS Act funding for TSMC. Even if the funds aren't fully revoked, TSMC may still face financial strain from covering expansion costs in the US. However, experts suggest that if any funds remain, Trump could ultimately withhold their distribution.
Reports indicate that funds from the CHIPS Act will not be prepaid. Companies receiving subsidies must first meet certain construction, production, and other requirements. The White House recently stated that grants and loans will be paid before the end of 2024, after the elections. Therefore, if Trump wins re-election and the newly appointed Secretary of Commerce cancels this subsidy, TSMC may not receive the promised US$6.6 billion from the Biden administration.
Experts quoted by media reports state that legally, this could be permissible if it is determined that the recipient company is linked to "technologies or products that raise national security concerns." However, how such determinations are made will ultimately rest with the Trump administration.
