U.S. subsidies are hard to come by
The United States** has pledged up to $52 billion in subsidies to TSMC to entice it to build factories in the United States. But the recently released details of the subsidies show that these subsidies are not easy to obtain.
First, the U.S. requires subsidized companies to surrender a portion of their excess profits, albeit capped at 75 percent of the grant, when their cash flow exceeds a certain threshold. Second, businesses that receive subsidies must also submit plans to provide employee childcare and invest in local communities. In addition, the United States has also imposed various restrictions on the follow-up investment behavior of enterprises, such as prohibiting production expansion and prohibiting participation in certain cooperative research and development. Suffice it to say, these strict conditions are very different from the expected "friendly subsidies".
In short, the subsidies offered by the United States are not as attractive as they could have been. Not only is it difficult for companies to obtain full subsidies, but they also have to bear additional operating costs and development constraints.
TSMC may have been tempted by the $52 billion subsidy before, but after careful consideration, it found that the actual benefits were limited. Under such conditions, the expected rate of return for TSMC to build a factory in the United States will be greatly reduced. It is foreseeable that the subsidy policy of the United States will be difficult to achieve the effect of attracting foreign-funded enterprises to deploy on a large scale. It sets too many barriers to entry, which can be intimidating for businesses. For TSMC, the actual attractiveness of this subsidy is much less than it once was.
The cost of building a factory in the United States has increased significantly
Compared to building a factory in Taiwan, the cost of TSMC to build a wafer factory in the United States is much higher. Industry estimates that the cost of building a factory in the United States is at least four times the cost of Taiwan.
This is mainly due to the higher cost of manpower, rent, and compliance in the United States. In addition, the procurement cost of raw materials and equipment is also higher than in Taiwan. Under the superposition of various factors, TSMC's overall investment in building factories in the United States has increased significantly. The cost of 4 times is undoubtedly a heavy economic burden for TSMC. This would seriously squeeze out funds that could otherwise be used for technological innovation. For the same scale of construction, TSMC needs to pay a huge amount of money in the United States that far exceeds Taiwan.
The high cost of building factories has also increased the pressure on TSMC's capital expenditure. In order to stay ahead of the curve, TSMC has always maintained high capital expenditures. If you add to this the huge investment in building a factory in the United States, its financial burden will increase exponentially.
From this point of view, TSMC's construction of a factory in the United States will inevitably disrupt its original financial balance and make the already high capital expenditure even more strained. This will not only squeeze out R&D funds, but also expose TSMC to greater financial risks. Such a significant increase in the cost of building a factory is bound to adversely affect TSMC's financial strength. This will also test its ability in capital operation and cost control.
Facing the risk of losing core strength
Building a factory in the United States, TSMC also faces serious cultural differences. As a result, it was unable to effectively retain talent, and the core team was at risk of attrition.
TSMC's management model and corporate culture have a strong oriental color. But this model is not well accepted by American employees. Cultural differences make it difficult for the two sides to reach an agreement, and TSMC is unable to form a strong management. The exodus of key technical personnel is even more worrisome. These core strengths are TSMC's most valuable asset. Once a large amount of loss, it will directly weaken TSMC's technological advantages.
Brain drain will eventually lead to the leakage of TSMC's key core technologies, which will inevitably weaken its technological advantages. TSMC is currently far ahead in terms of process technology, which is its most important source of competitiveness. Once there is a drain of key talent, the process technology may also be acquired by competitors, and the advantage will be lost. In addition, the dispersion of building factories in the United States will inevitably hit TSMC's synergies. This will also weaken its overall R&D strength.
To sum up, the risk of brain drain brought by TSMC's construction of factories in the United States is likely to hit the key point of its technological advantages. This is bound to shake its leading position in the global foundry field. Looking ahead, TSMC's ability to properly address the challenge of cultural differences and prevent the outflow of core technologies will have a significant impact on its market position. We'll see. List of high-quality authors