TSM is a foreign domiciled country. I don’t know how income taxes are determined for those entities. But if they build plants here, create good jobs for US workers that pay taxes, diversify the sourcing of what they’re producing for us (our not being overly dependent on manufacturing facilities inside of Taiwan), and those US fabs are generating profits by selling to customers outside of the US then it’s a great deal. They get a credit on their US tax obligation on profits that aren’t there otherwise (and with a mix of customers, not almost exclusively US customers), then those tax credits cost us very little. A net positive actually with a quick pay back. It’d be a different story if the US chip producers hadn’t mostly gone fabless. TSM looks like a similar arrangement to Japan, Germany, and Korea assembling vehicles here and selling them around the globe. There’s currently so much demand for chips right now that TSM isn’t going to drive others (Intel for example) into financial despair.
Last time I checked, INTC and TXN were the only US integrated device manufacturers (along with Samsung in SK). ADI, IBM, Broadcom, MU, HP, and ON are loosely defined as IDMs by some definitions. Our big chip dogs (NVDA, QCOM, AMD) are fabless and have design and IP while there are only a couple of foundry operators to make their products. TSM is by far the biggest, Global Foundries is a fraction of TSM’s size, and China owned UMC are pretty much the pure play foundry universe. Building a strong alliance with TSM is a great strategy. Winning with fair trade.
Another benefit for TSM… access to US capital through ADRs. A benefit for US citizens… capital gains on those ADR shares and appreciation for those not selling. Plus the dividend. Benefit for dot gov… tax revenue on the capital gains and dividends.
