Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) new planned investment of US$100 billion in the US “doesn’t seem to make sense economically, but does have a strong political rationale,” a Heritage Foundation researcher said on Tuesday.
In an e-mail reply to a Central News Agency (CNA) inquiry, Michael Cunningham, a research fellow at the Heritage Foundation’s Asian Studies Center, said that with US President Donald Trump now threatening tariffs, many countries and companies, including Taiwan and TSMC, were trying to make the best of difficult times.
As to why TSMC, a private firm, would be motivated by a “strong political rationale,” Cunningham said that the company “faces tariff threats and is trying to do all it can to signal its commitment to the US and counter the narrative that its dominance in chip manufacturing harms US interests.”
Photo: Bloomberg
“TSMC and Taiwan are doing all they can to adjust to this new reality and show the Trump administration — and the American people — that they are actively contributing to US priorities,” he said.
TSMC, the world’s largest contract chipmaker, on Monday announced that it would invest an additional US$100 billion in Arizona over the next four years to set up three chip fabrication plants, two advanced packaging plants, and a research and development center.
TSMC has already committed to investing US$65 billion in Arizona to build three wafer fabs.
The first fab in Arizona has started production using the 4-nanometer process, while the second fab, which would be using the more sophisticated 3-nanometer, 2-nanometer and A16 processes, is under construction and is expected to begin production in 2028.
The third fab is expected to begin production by 2030 using 2-nanometer or more advanced processes, TSMC said in April last year.
Many analysts have raised concerns that much higher production costs in the US would erode TSMC’s profit margin and affect its cash dividend payout.
Cunningham cited Trump’s comments in a news conference with TSMC chairman C.C. Wei (魏哲家), in which the US president said chips made in Taiwan would eventually face tariffs.
It is possible that Trump would no longer be in office before the new investments start to roll out chips, so “it’s unclear how the announcement will have any impact on possible tariffs during Trump’s term unless some agreement was made as a condition of the investment, though I haven’t seen any reports of this being the case,” Cunningham said.
Thomas Shattuck, a senior program manager at the University of Pennsylvania’s Perry World House, told CNA in an e-mail response that TSMC’s new investment has been widely expected in the wake of Trump’s tariff threats.
“When Trump came into office, I emphasized the two things that Taiwan would need to do to lower the heat from Trump: a huge arms package request and more investment from TMSC,” Shattuck said.
The latest pledge simply signaled TSMC’s hopes to minimize the possibility of a tariff on Taiwanese chip manufacturing through more investments in the US, which has been the primary economic goal of the Trump administration, Shattuck said.
Cunningham said whether TSMC pledges more investments in the US or not, it is hard for Washington to stay out of any war involving Taiwan, while Shattuck said he did not see any direct connection between the investments and Trump’s decision to defend Taiwan.
“Obviously, more Taiwanese investment in the USA could help change Trump’s attitude towards Taiwan, but the full effect and connection will remain unknown until the time comes when such a decision would need to be made,” Shattuck said.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS