Taiwan Semiconductor Manufacturing Company (TSMC) is a world-leading manufacturer of advanced microchips, operating in the geopolitically volatile region of Taiwan. This location has raised concerns in Washington due to its close proximity to China. TSMC is a dominant player in the semiconductor industry, and the United States heavily relies on its products. To reduce dependency on Taiwanese chips and bolster the domestic semiconductor sector, the US government has provided substantial funding to support TSMC’s operations in the US.
Over the past four decades, TSMC has invested billions of dollars in building a strong presence in Taiwan. It employs a large number of highly skilled professionals for the complex task of chip production. Mark Liu, Chairman of TSMC, acknowledges that replicating their success in Taiwan would be extremely challenging and claims that their operations cannot be relocated elsewhere.
TSMC has begun a global expansion plan, establishing factories in the US, Japan, and potentially Germany. This strategy aims to address the US officials’ call for reduced reliance on Taiwanese chips. Mark Liu, with his expertise in electronic engineering and computer science, plays a crucial role in forging relationships with US government officials and agencies. TSMC’s influence was instrumental in the creation of the CHIPS and Science Act, which aims to expand the US semiconductor industry.
Due to TSMC’s unmatched position in the semiconductor industry, any conflict involving Taiwan could disrupt the global supply of microchips, significantly impacting the technology industry and the global economy. Consequently, TSMC maintains strict security measures within its offices and operates massive, windowless buildings for round-the-clock chip production.
TSMC has faced pressure from both the United States and China. US leaders have urged TSMC to establish production facilities outside Taiwan, while China has attempted to compete with TSMC through various means, including cyberattacks and massive investments. TSMC, caught in the middle, suspended orders from Huawei in 2020, as it relied on American technology and had no choice but to comply.
Contrary to the belief that Taiwan’s advanced chip manufacturing acts as a deterrent against Chinese military action, Mark Liu argues that China’s invasion of Taiwan is not directly influenced by the semiconductor industry. He believes that the preservation of the status quo in Taiwan depends on the US and China’s ability to maintain stability.
TSMC has committed a $40 billion investment in Arizona to construct two chip production plants. However, the process has faced delays, challenges, and cultural differences between Taiwanese and American workers. The high costs associated with manufacturing in Arizona, which could be four times higher than in Taiwan, raise concerns about whether American companies will be willing to pay a premium for locally-made chips. Mark Liu believes that the US government needs to offer additional incentives to promote the purchase of American-made chips, beyond the subsidies provided in the CHIPS Act.
TSMC’s decision to expand globally was influenced by the Trump administration’s push for US investments. The State Department emphasized the importance of TSMC’s advanced chips in military equipment and arranged a call between Mark Liu, Secretary of State Mike Pompeo, and Commerce Secretary Wilbur Ross. This outreach aimed to catalyze the American semiconductor industry and leverage TSMC’s technological leadership.
In conclusion, TSMC’s position in the global semiconductor industry and its presence in Taiwan have become significant factors in geopolitics. The company’s ongoing expansion and efforts to address concerns about reliance on Taiwanese chips underscore its commitment to global partnerships and its role as a leader in advanced chip manufacturing.
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