After months of discussions, the Chips and Science Act has now been approved by the US Congress and is awaiting President Joe Biden’s signature. The world’s semiconductor industry is currently considering its effects. The impact of the Chips Act on TSMC is yet uncertain, although the US$52 billion in subsidies for Taiwan’s chip design industry are unlikely to change their current business practices.
Taiwanese IC design houses mostly rely on Taiwanese suppliers for both front-end and back-end design processes. Like TSMC founder Morris Chang, Taiwanese fabless players believe that more money should be invested in cutting-edge technology and that the subsidies provided by the Chips Act are too small to have a significant impact on the US chip manufacturing business. Their counterparts across the Pacific agree with them; fabless designers like AMD, Nvidia, and Qualcomm have argued that the current subsidies are unfair to fabless businesses since they are overly concentrated in the manufacturing industry.
The only apparent benefit of the Chips Act for the US chip design business is that it gives the few American IDMs involved in analog IC a competitive advantage. This analog IDM competition, including Texas Instruments (TI), may have an effect on Taiwanese chip design firms. However, some Taiwanese analog chip suppliers said that American analog IDMs already had a considerable competitive advantage over their rivals, making these new subsidies irrelevant.
In the meantime, the biggest chip design company in Taiwan has sparked a lot of rumors with its recent actions. On July 25, it was made public that MediaTek and Intel would collaborate on a foundry, employing the latter’s fledgling Intel Foundry Services for forthcoming SoCs. A new chip design facility at Purdue University in Indiana was also unveiled by MediaTek four days later.
Some saw MediaTek’s actions at this crucial time—when the Chips Act is just around the corner—as an effort to strike a balance amid the escalating US-China rivalry, particularly given that the majority of MediaTek’s clients are in China. Although MediaTek has not yet responded, other Taiwanese fabless players may soon need to take geopolitics into account.