For Taiwanese fabless players, the US Chips Act bears little significance

The Chips and Science Act, after months of debates, finally made it through the US Congress and now waits for president Joe Biden’s signature. Now, the global semiconductor industry is wondering its impacts. While it remains up for debate how the Chips Act will impact TSMC, for Taiwan’s chip design sector, the US$52 billion subsidies aren’t likely to alter their current strategies.

For both front-end and back-end design processes, Taiwanese IC design houses primarily depend on Taiwanese suppliers. Sharing TSMC founder Morris Chang’s observation, Taiwanese fabless players generally regard Chips Act subsidies to be too meager to make substantial impacts on the US chip manufacturing industry, believing that more resources should be put into cutting-edge technologies. The view is also shared by their peers across the Pacific: fabless designers like AMD, Nvidia and Qualcomm have complained that current subsidies are too focused on the manufacturing sector, thus unfair to fabless companies.

The Chips Act, as it seems, benefits US chip design industry little, apart from giving a competitive edge to the few American IDMs active in analog IC. These analog IDMs, such as Texas Instruments (TI), might impact Taiwanese chip design houses. However, some Taiwanese analog chip providers indicated that American analog IDMs already enjoyed a significant advantage against peers, rendering these new subsidies inconsequential.

Meanwhile, Taiwan’s largest chip design firm has raised much speculation in its recent moves. On July 25, MediaTek was revealed to form a foundry partnership with Intel, using the latter’s nascent Intel Foundry Services for upcoming SoCs. Four days later, MediaTek also announced a new chip design center at Purdue University, Indiana.

At this sensitive juncture, with the Chips Act around the corner, MediaTek’s moves were interpreted by some as an attempt to strike a balance amid intensifying US-China rivalry, especially when MediaTek’s customers are mostly in China. Even though MediaTek has so far made no response, other Taiwanese fabless players might have to factor in geopolitics in the near future.