for companyWorth $430 billion, straddling one of the world’s most dangerous geopolitical hotspots, Taiwan Semiconductor Manufacturing Company’s unflappable (TSMC). Both the U.S. and China covet its unparalleled advanced chip manufacturing capabilities. It is a much larger supplier of the former than the latter, but if either superpower completely stifled its independence through economic pressure or brute force, the consequences would be enormous. Many of its manufacturing plants are located on the west coast of Taiwan and face the danger of Chinese invasion of the Taiwan Strait. However, it refuses to panic. Its 91-year-old founder Zhang Zhongmou said on a podcast last year: “If there is a war then, my God, we have more to worry about than chips.” His successor chairman Mark Liu insisted that peace is in everyone’s interest Benefit.
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Such insouciance can appear naive. Like it or not, great power competition around semiconductors — what some call the Silicon Curtain — has solidified in recent months. China has long sought to build a chip industry from scratch, with little success. Last year, the United States tightened its grip on certain “bottleneck” technologies, including artificial intelligence chip design, chip software and semiconductor manufacturing equipment, to curb China’s ambitions.In addition, the American chips The bill enacted last year used subsidies to attract investment commitments of about $200 billion.One of the biggest beneficiaries is Intel, a competitor and customer of Intel TSMC.
In response, TSMC It looks as though it has joined Uncle Sam. Last month, President Joe Biden stood in front of the huge new U.S. factory the company is building in Phoenix, Arizona, to celebrate a proposed $40 billion investment.however look carefully TSMC Offers lessons on how to deal with dirty geopolitical affairs. Contrary to what some may think, the new Cold War has not forced it to break away from Taiwan, which has the foundry capacity to manufacture more than three-quarters of the world’s high-end chips. It’s unlikely to jeopardize its profitability, which generates the cash flow necessary to maintain its edge. However, it is looking at a long-term future where geographic flexibility may come at a premium at some point. In short, it is playing a delicate diplomatic game that puts its commercial interests first.
The Phoenix factory is on display A For those who are afraid of “de-Taiwanization”. Scattered across miles of desert, it was the size of a pharaoh. It will begin producing four-nanometer chips next year, and if it can beat Intel, it will be the most advanced chip ever produced in the United States. A significant portion of the $40 billion investment, TSMC It will be a second fab, which will start producing more complex chips in 2026, he said. Its biggest customer in Phoenix will be Apple. Besides the U.S., it plans to build its first factory in Japan for another electronics maker, Sony. This looks like a strategy to stay close to the customer, and if you’re sitting in Taiwan, it might look like give up.
“It’s total nonsense,” retorted Pierre Ferragu of financial firm New Street Research. TSMC Almost simultaneously, a new fab opened in Taiwan with four times the wafer capacity and more advanced technology than two proposed fabs in Arizona. Its bet on the US is more of a long-term insurance policy than an immediate game-changer.it makes TSMC Begin the arduous work of recruiting a workforce and gathering suppliers in the U.S. to provide a baseline for expansion “if the Chinese are crazy enough to bomb Taiwan.”But in the foreseeable future, most R&Man Likely to stay in Taiwan.at least four out of five TMSCcapacity.
Next is profitability. The fear is twofold.First, for all the subsidies in the US, the cost of manufacturing there is staggeringly high, and people have been concerned TSMC Will bear the loss as a show of goodwill to the country.Second, subsidies could support the revival of Intel, which has long since lost its lead in chipmaking TSMC But chip nationalism has been preached ever since. In its fourth-quarter results on Jan. 12, TSMC Take some of those fears away. While construction costs in the U.S. are five times higher than in Taiwan, officials say customers who want chips made in the U.S. will pay more to protect profits. In addition, despite the cyclical downturn in the global chip market, TSMC It is increasing its market share compared to rivals such as Intel. As industry consultant Malcolm Payne puts it, it is so far ahead in chipmaking that its state-of-the-art products will always be in short supply.
In certain aspects, TSMC It is subtly currying favor with the Biden administration. The Arizona factory may not be able to solve the chip security problem in the United States. But at the very least, they’ll provide some of the good (i.e. unionized) manufacturing jobs the president loves so much. Among other things, the company is building a long-term hedge for its future. It argues that the manufacture of high-end chips will become increasingly complex and expensive, and that the digitization of the world economy will increase the intensity of their use.In this case, the final TSMC Possibly surpassing Taiwan, whose population is shrinking. Access to more global talent, in the US or elsewhere, will be a priority.
Silicon curtain call
Will its offshore investments contribute to the oversupply currently plaguing the global chip market? No, said Mr Payne. Chip demand has grown by an average of 8% per year. It makes sense to plan for the future if the investment can be adjusted to market conditions.More important is the extent to which the US and its allies have blacklisted China, where TSMC There is a fab in Nanjing that produces domestic mainstream chips. Companies may be right to believe that cooler heads will prevail. But if it’s wrong, at least it has begun the long process of hedging its bets. ■
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