According to 36kr Financial News app, media reports citing informed sources revealed that Taiwan's semiconductor giant Taiwan Semiconductor (TSM.US) and American semiconductor industry leader GlobalFoundries (GFS.US) have reached a binding agreement on billions of dollars in grant subsidies and special loans to support the construction of factories in the United States for these two major semiconductor manufacturers. The Biden team is working tirelessly to distribute subsidies under the 'Chip Act', realizing the ambitious goal of 'Reshoring Chip Manufacturing to the USA' vigorously promoted by the Biden administration. Informed sources stated that some US officials are expected to announce an agreement in the coming weeks.

It is understood that these important agreements on subsidies and loan disbursements, announced earlier this year as preliminary agreements, are now being pushed by the Biden administration to disburse the subsidies for building factories in the US that are supported under the 'Chip and Science Act' passed by the US government in 2022 before the end of January.

In the view of some news commentators, the purpose of the Biden administration speeding up the subsidy distribution progress may be to leave at least one historic achievement of pushing for 'Reshoring Chip Manufacturing to the USA' before leaving office in January next year. It may also be due to pressure from companies like Taiwan Semiconductor and Samsung, fearing that non-US chip giants are concerned that Trump may refuse to provide any subsidies to overseas chip companies after taking office.

According to informed sources, it is currently unclear when the subsidy and loan agreements will be officially signed, and when the incentive measures will be formally announced. Informed sources indicated that the amount of the subsidy roughly matches the preliminary nature of the agreement.

Preliminary agreements indicate that Taiwan Semiconductor will receive a subsidy scheme from the US government announced in April, which includes up to $6.6 billion in grant subsidies and as much as $5 billion in special loans to support the construction of three large semiconductor manufacturing plants in Phoenix, Arizona, USA, capable of future production of high-end chips at 3nm and below.

Compared to the massive scale of Taiwan Semiconductor, the smaller-scale US-based chip manufacturer GlobalFoundries has agreements starting from February involving approximately $1.5 billion in grant subsidies and up to $1.6 billion in loans to support a new factory in New York State, as well as to expand existing chip manufacturing infrastructure in New York and Vermont.

Supported by the 'Chip Act' passed by the USA Congress, the USA government will allocate a grant of $39 billion, along with billions of dollars in loans and 25% tax credits, to comprehensively revitalize the long-term outward flow of chip manufacturing industry in the USA, which has primarily shifted to Asia in the past few decades. It has also generated private company investments that are ten times the committed amount, including investments in the most advanced 3nm and below process chips, mature semiconductor processes, and supply chain component factories.

It is understood that more than 20 chip giants, including Taiwan Semiconductor, Samsung, Intel, and Micron, are waiting for government assistance. After preliminary agreement negotiations, they have spent several months conducting due diligence. There is nearly $3 billion left to be allocated to specific preliminary agreements.

However, the new binding agreement reached between Taiwan Semiconductor and Ge Firm, two leading chip manufacturers, means that under the leadership of Donald Trump, who will return to the White House in January, there is still a possibility of completing most of the fund allocation. Once the contract is signed, subsidy or loan funds will be disbursed in batches based on specific project milestones.

Trump publicly criticized the 'Chip Act', causing urgency for both Taiwan Semiconductor and Samsung.

White House policy leaders, including Biden, are eager to quickly address these issues to start channeling funds to projects that meet these benchmarks. This urgency may also be due to recent comments by Trump calling the Chip Act 'terrible'. It is currently unclear what Republican control will bring. Speaker of the House Mike Johnson previously stated, after proposing and immediately withdrawing the possibility of completely repealing the 'Chip Act', that he hopes to 'simplify' the Act.

The ambition to drive the 'Chip Manufacturing Back to USA' has been vigorously pursued by Biden since he took office. Biden himself considers the reshoring of this high-end manufacturing industry as one of his outstanding political achievements. According to statistics from the Semiconductor Industry Association (SIA) in the USA, the USA's share of global semiconductor manufacturing capacity has dropped from a peak of 37% in 1990 to only 12% in 2020. Therefore, Biden considers bringing back chip manufacturing to the USA as one of the most important tasks during his term.

In 2022, the USA government passed the 'Chip and Science Act', which aims to help chip companies build more chip factories in the USA. The ultimate goal of the Act is to once again make the USA the strongest country in chip manufacturing and accelerate the realization of the USA government's vision of 'Chip Manufacturing Back to USA'. With the recent announcement of Taiwan Semiconductor's first large chip factory in Arizona, the factory has made significant breakthroughs in chip yield, with a process technology of 4nm level, one of the most advanced technologies for Taiwan Semiconductor, second only to 3nm level. The slogan 'Chip Manufacturing Back to USA' seems no longer an empty promise.

However, recently elected Trump has fiercely criticized the 'Chip Act', stating that imposing tariffs on foreign chip manufacturers is more effective in revitalizing the USA chip manufacturing industry than providing direct subsidies. This has raised concerns in the industry that the USA government under Trump's leadership may try to change the preliminary agreements of the 'Chip Act'. This has put enormous pressure on Biden and other White House officials, as Biden seeks to reach binding agreements with these chip companies before leaving office.