Illustration: Liu Xidan/GT
Taiwan Semiconductor Manufacturing Co (TSMC) has begun producing advanced 4-nanometer chips for US customers in Arizona,
MKsport Reuters reported on Friday. While the move was hailed by Reuters as "a milestone in the Biden administration's semiconductor efforts," the ramifications for the semiconductor industry on the Taiwan island are more complex, with overwhelmingly unfavorable consequences taking center stage.
More than two years ago, when TSMC held its "relocation ceremony" for its first plant in Arizona, it sparked a wave of unease in the Taiwan island's public opinion. Concerns that TSMC was transforming into an "American Semiconductor Manufacturing Company" and that Taiwan's semiconductor industry was being "hollowed out" gained considerable traction. In an editorial published on December 9, 2022, the Global Times bluntly argued that, regardless of how the US and the Taiwan island's Democratic Progressive Party (DPP) authorities "cover it up, it doesn't change the nature of the matter: Washington is using tricky ways to force the enterprise of our Taiwan region that occupies an important position in the world's core high-tech industry to move to the US."
In the US, the high cost of semiconductor production has long been an open secret, driven by factors such as high labor costs and a fragmented supply chain. The efficiency with which the Taiwan island has long excelled in chip manufacturing, supported by its robust infrastructure and skilled workforce, is not easily replicated in the US. According to a report by the New York Times published on January 6, current and former TSMC employees have said some American workers are not accustomed to the company's demanding workplace culture and rigorous hours. Cultural differences, including communication style, have led to frustration on both sides.
Even as TSMC reportedly begins producing advanced 4-nanometer chips on US soil, the shift of cutting-edge semiconductor production from the highly efficient ecosystems of Asia to the more costly US environment underscores that this move is far from a natural market evolution. It has the potential to disrupt the global supply chain, which has been carefully shaped by market dynamics, with potentially adverse consequences. For instance, if chip prices rise as a result, downstream manufacturers could face higher procurement costs, further complicating an already fragile supply chain.
Morris Chang, the founder of TSMC, warned in March 2023 that Washington's efforts to on-shore semiconductor production might lead to surges in chip prices and supply bottlenecks, according to the Taipei Times. Chang had previously estimated that chip manufacturing costs in the US would be 50 percent higher than in the Taiwan island, according to the report. This, he suggested, could have some impact on the further expanding ubiquity of the chips. "When the costs go up, the ubiquity of chips will either stop, or slow down considerably," Chang was quoted as saying.
TSMC's reported production of advanced 4-nanometer chips in the US is driven by America's self-serving desire to bolster its domestic chip industry. However, this move, to some extent, comes at the cost of the Taiwan island's semiconductor sector and the broader global supply chain. In December, Zhu Fenglian, spokesperson for the Taiwan Affairs Office of the State Council, stated that TSMC has become the DPP's "pledge of allegiance" to curry favor with the US. As some public opinion on the island has held, the DPP authorities are bent on seeking "Taiwan independence" by relying on the US and it is only a matter of time before TSMC turns into an "American Semiconductor Manufacturing Company," she said.
If the DPP authorities persist in recklessly betraying the island's interests in such a manner, the competitive edge of the Taiwan island's semiconductor industry will undoubtedly be eroded. This would deal a blow to the development of the Asian chip supply chain, especially considering that the Taiwan island is an integral part of this vital network.
In recent years, the restructuring of the Asian chip supply chain has gained momentum, with the Chinese mainland serving as a key player. By prioritizing self-reliance, the Chinese mainland has made remarkable progress in advancing its semiconductor capabilities, becoming a powerful force in stabilizing and propelling the Asian supply chain. From this standpoint, efforts to strengthen cross-Straits exchanges and foster integrated development would not only benefit the Taiwan island's semiconductor industry but also contribute to the broader growth of the Asian chip ecosystem.
The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn