Faced with Internal and External Pressures, Where is TSMC's Backing？
China Times Editorial, November 1, 2024
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In a recent televised interview, U.S. Republican presidential candidate Donald Trump stated that upon returning to the White House, he will impose tariffs on imported chips from Taiwan and other places. As soon as these words emerged, the Taiwan Semiconductor Manufacturing Company’s (TSMC) American depository receipt (ADR) stock price plummeted 4.3 percent and dragged down TSMC’s Taiwan stock price by NT$10, causing investor panic. According to TSMC founder Morris Zhang, the company has become a battleground for military strategists, with “the most serious challenge lying just ahead.”
Recently, TSMC has been frequently covered in the news. For example, the production rate of semiconductor wafers in trial productions at the Arizona plant in the United States has been higher than that of similar wafer fabs in Taiwan. The first TSMC fabrication plant in the United States is scheduled to mass-produce using 4-nanometer process technology in the first half of 2025. This news brings high expectations for the future of TSMC’s American fab, but also anxiousness as well. The performance of the American fab’s advanced process is high, which means it is feasible for TSMC to replicate Taiwan’s production process in the United States. Thus, is the “U.S. Semiconductor Manufacturing Company” imminent?
TSMC’s investment in the United States is indeed expanding. Apart from the second factory, this year TSMC also announced it will invest in a third wafer fab in Arizona. The second fab will produce the globe’s most advanced 2-nanometer process technology, using next-generation nanosheet transistor structure, and is expected to mass-produce in 2027. The third wafer fab is expected to adopt a more advanced process by the end of 2030. When TSMC announced the establishment of a factory in Arizona in May 2020, the committed investment amount was US$12 billion, which increased to $40 billion in December 2022. The total investment amount of the three confirmed wafer fabs now exceeds $65 billion. Experts estimate that based on the 445 hectares of land acquired by TSMC in Arizona, TSMC will have six factories in the United States. The amount of investment has been multiplying, and the manufacturing process has become increasingly advanced. TSMC’s investment in the United States is unstoppable and cannot but continue.
Additionally, foreign media have reported that TSMC was recently involved in the so-called “white glove incident,” of indirectly supplying semiconductors to mainland telecom giant Huawei, causing shock. According to foreign media reports, a Canadian technology company recently discovered TSMC chips when dismantling Huawei processors and notified TSMC. Although TSMC also promptly notified the U.S. Department of Commerce and ceased supplying the rumored “white-glove factory,” this incident nevertheless triggered the sensitive nerves of the American chip ban, affecting the United States, mainland China, and Taiwan’s semiconductor industries. Facing the dual pressures of strict American bans and breakthroughs from mainland factories, it is evidently difficult for TSMC to avoid complications no matter how cautiously it treads.
Recently, Director Raymond Greene of the American Institute in Taiwan (AIT) stated in an interview that TSMC was forced to invest in the United States mainly for the reason that Taiwan cannot provide sufficient green power and water sources for TSMC. Director Greene said this with the intention of providing clarification on the theory that the United States forced the company to invest there. However, this is the first time the United States has clearly indicated key reasons for TSMC’s departure. This comes as humiliation for the Democratic Progressive Party (DPP) administration, which has repeatedly claimed there is no shortage of electricity and sufficient green electricity. This foreshadows the challenges of developing power-consuming industries such as semiconductors and artificial intelligence (AI) in Taiwan, which President Lai Ching-te’s administration is still unwilling to acknowledge.
Recently, Nvidia CEO Jensen Huang expressed his willingness to return to Taiwan to invest, but under the condition that Taiwan can supply 10 billion kilowatt-hours of green electricity. Minister of Economic Affairs J.W. Kuo responded that 10 billion kilowatt-hours of green electricity is not an issue. Taiwan has been developing green power at full speed since Tsai Ing-wen took office as president in 2016. But within the past eight years, it has generated only 20 billion kilowatt-hours per year. How then can Minister Kuo have the confidence to make such a guarantee to Mr. Huang? It is simply an empty promise.
In 2022, President Joe Biden of the United States signed the CHIPS Act, allocating $39 billion to subsidize the semiconductor supply chain. In April of this year, TSMC applied for $6.6 billion in subsidies from the United States. According to media reports, the U.S. government has yet to allocate the funds, and Mr. Trump has said that he will not allocate funds after taking office, “because they have stolen the American chip industry and are making a lot of money.” In fact, the U.S. national debt has accumulated over $35 trillion, and the financial burden is heavy. Regardless of who is elected president, they may not be able to fulfill the previous promises.
The United States is closely watching, and mainland China is in close pursuit. By contrast, the one with the least active approach is Taiwan’s government. TSMC has not been able to get assistance on external fronts from the DPP administration in stepping forward and trying to obtain more favorable investment conditions for TSMC. TSMC has been alone in enduring the high pressure of the U.S.-China technology war; internally, it has to contend with the plight of Taiwan’s shortage of water, electricity, land, and other resources.
Perhaps solutions to the difficulties TSMC faces may not be found very soon, but improving Taiwan’s investment environment and strengthening the resource conditions are things that the government can do. So long as TSMC’s competitiveness in Taiwan is improved, this is the best protection for the company. Even if it has to go international, Taiwan can still become the strongest backing for TSMC. Taiwan’s “protective sacred mountain” (namely TSMC) likewise needs protection. The government must take pragmatic action for Taiwan’s economy.
Photo from: The Storm Media
Article from: https://www.chinatimes.com/opinion/20241101004600-262101