According to Bloomberg, Taiwanese lawmakers approved legislation that will permit chip companies to claim tax credits for up to 25% of their annual R&D expenses. This is an effort to counter other countries’ pushes to develop their own supply chains by ensuring that cutting-edge semiconductor technology remains in Taiwan.
The Ministry of Economic Affairs stated that Taiwan is an important link in the global supply chain and a long-term reliable partner of international manufacturers, which is unique and irreplaceable.
In the face of huge incentive measures proposed by the United States, Japan, South Korea, and the European Union.”
Additionally, Taiwanese chipmakers would be able to apply for tax credits on 5% of their annual expenditures for equipment purchases for advanced nodes. According to Bloomberg, credits won cannot equal more than 50% of a company’s yearly income taxes.
The regulations, which were announced late last year, are anticipated to go into effect this year.
U.S Approved CHIPS Act is the Driving Force Behind Taiwan’s Incentives
In order to encourage domestic chip production, the CHIPS and Science act was passed by the US in July. Since then, a number of American fabrication plants have been proposed, with Intel investing over $40 billion in Arizona, Ohio, and New Mexico facilities. The CHIPS Act may help Taiwan Semiconductor (TSMC) build a 5 nanometer-capable fabrication facility in Phoenix by mid-2020. Texas Instruments, Samsung, and GlobalFoundries are also planning to expand or build new facilities in the United States.
Although having domestically produced chips has traditionally been regarded as crucial for maintaining national security, the early stages of the Covid-19 outbreak showed the world what occurs when supply channels become clogged, leading to a lack of chips for computers, vehicles, and other products. Companies have been attempting to diversify their supply chains as a result, and it appears that several of them will be able to follow the money across the world when combined with a dose of geopolitical tension.