O'Grady's PowerPage

Tag: Tax

  • Apple to avoid steep U.S. tariffs on Chinese imports until mid-2027

    Apple to avoid steep U.S. tariffs on Chinese imports until mid-2027

    Apple and other U.S. technology companies may get a reprieve from some of the higher tariffs on Chinese components until 2027.

    Per AppleInsider and CNBC, a Federal Register filing from last Tuesday indicated that the United States will hold off on raising its new tariff on Chinese semiconductor imports until June 2027. This, in turn, could delay the financial hit on Apple’s component sourching efforts for Macs, iPhones, and other products.

    According to the filing, the Trump Administration confirmed it will take action against China under Section 301 of the Trade Act of 1974, and the response will be a tariff on semiconductors. The filing, in turn, will be implemented immediately, but the administration is setting the additional tariff rate at zero. Instead, the Trump Administration plans to increase the tariff level on June 23, 2027, effectively delaying the impact.

    The administration declined to state what the percentage would be, but said it will be announced at least 30 days ahead of the scheduled increase.

    The decision to hold off on raising the tariff cost will be helpful to many manufacturers. Aside from avoiding extra tariffs on current and near-future imports, it also buys companies time to arrange sourcing from other countries not affected by the tariff situation.

    Given that Apple still sources its A-series and M-series Apple Silicon chips from TSMC in Taiwan, the components are still subject to a 20 percent reciprocal tariff, but not on tariffs specifically targeting China.

    Apple was previously safe from the threat of a 100% percent semiconductor import tariff. It escaped that tariff because in August, it pledged to invest $100 billion in U.S. manufacturing efforts.

    Stay tuned for additional details as they become available.

    Via AppleInsider, Federal Register, and CNBC

  • TSMC to receive $6.6 billion grant from United States government to help boost production

    TSMC to receive $6.6 billion grant from United States government to help boost production

    TSMC is about to get a hefty chunk of funding from the United States government.

    The United States Commerce Department on Monday announced that it will be allocating a $6.6 billion subsidy to chip manufacturer TSMC for the advancement of semiconductor production in Phoenix, Arizona. TSMC will also receive $5 billion in loans and be eligible to claim an investment tax credit of up to 25 percent of capital expenditures. The move is part of a larger initiative under the CHIPS and Science Act, which aims to rejuvenate the United States’ semiconductor manufacturing capabilities.

    TSMC has already committed to an escalated investment of $25 billion, raising its total investment to $65 billion, and making this the largest foreign direct investment in a new project in U.S. history.

    TSMC has also announced plans to construct a third fabrication plant in Arizona by 2030. The first TSMC plant in Arizona will start producing 4nm chips next year. The second plant, originally designed to make 3nm chips, will also make 2nm ones by 2028. The third plant will produce 2nm chips with the capacity to make even more advanced semiconductors in the future.

    Apple and TSMC are currently partnering and producing Apple’s most advanced chips, which are based on the 3nm process.

    Stay tuned for additional details as they become available.

    Via MacRumors and Bloomberg

  • TSMC’s second Arizona plant could face years-long delays, not open until 2028

    TSMC’s second Arizona plant could face years-long delays, not open until 2028

    TSMC’s second Arizona-based manufacturing plant could face delays of up to two years and no longer produce the promised 3-nanometer chips.

    TSMC’s second plant in the state was announced in 2022 with the company increasing its investment from $12 billion to $40 billion for the new factory’s development. This plant was specifically said to be for making 3nm processors for the iPhone, though it was later revealed that all Arizona-made chips would still go to Taiwan for final assembly.

    Per the Wall Street Journal, TSMC chair Mark Liu has announced that although construction of the second plant is ongoing, it will not be mass-producing processors by 2026 as planned. At present, TSMC expects it to be fully operational by 2027 or 2028, though it gave no specific reasons for the delay.

    TSMC currently produces processors for a number of companies and retains a long-term relationship with Apple. Apple CEO Tim Cook has confirmed that Apple will use TSMC chips made in Arizona.

    Liu also said that the new factory may not be dedicated to 3nm production. He said that the specific chip type had yet to be determined and that the choice would be affected both by customer demand and government incentives.

    With the incentives in mind, since TSMC is a Taiwanese company, the U.S. does not have an income tax agreement with that country, and the chip manufacturer faces double taxation. As such, without an agreement, it’s been reported that TSMC would therefore be paying out over half of its US profits in tax.

    Liu also said that TSMC is in “consistent communication with the U.S. government on incentive and tax credit support” regarding its Arizona operations.

    In addition to these critiques, the company’s Arizona plant construction has been heavily criticized for being unsafe, and TSMC workers have said American staff “are the most difficult to manage.”

    Stay tuned for additional details as they become available.

    Via AppleInsider and The Wall Street Journal

  • Apple settles Irish tax dispute via $15 billion lump sum payment

    Getting ahead of an upcoming 2016 tax ruling, Apple has paid the equivalent of more than $15 billion to the Irish government to settle claims of underpayment of tax to the European Union.

    The company’s 13.1 billion euro outstanding balance of its disputed balance to the government of Ireland, according to the country’s finance mirror.

    In addition to the 13.1 billion euro balance, Apple has paid an additional 1.2 billion euros ($1.4 billion) in interest.

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