Trump's Emphasis on Semiconductor Self-Sufficiency and TSMC's US Factory Construction (Comprehensive)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min, Beijing=Correspondent Park Sun-mi, Reporter Lee Chang-hwan] Taiwan's TSMC, the world's number one semiconductor foundry (contract manufacturing) company, is set to build a new factory in Arizona, USA. The company plans to announce detailed plans soon, drawing attention to whether this will trigger a rush of semiconductor companies like Samsung to the US.

On the 14th (local time), the Wall Street Journal (WSJ), citing sources, reported that TSMC is expected to announce plans as early as the 15th to build an advanced system semiconductor foundry factory in Arizona. Sources said that the US government departments including the State Department and the Department of Commerce are all involved in the TSMC factory construction, and semiconductor production could begin as early as the end of 2023. The semiconductors produced will be advanced 5nm (1nm = one billionth of a meter) chips, which TSMC started manufacturing a few months ago at its Taiwan factory. The total investment for the factory construction is expected to be $12 billion. However, since TSMC's US factory construction plan has not yet been publicly disclosed, the exact budget and the extent of subsidies from the US government remain unconfirmed.

If TSMC builds a factory in the US, it will be the second production base in the US after Washington state. This aligns with the Trump administration's strategy to promote semiconductor self-sufficiency and reduce dependence on Asian regions such as Korea, Taiwan, and China. Recently, amid concerns over supply chain disruptions of semiconductors, key components of advanced industries triggered by the COVID-19 pandemic, the US has been discussing system semiconductor factory construction with TSMC, Intel, Samsung, and others. TSMC holds more than half of the global foundry market share and has many US companies such as Apple, Qualcomm, and Nvidia as customers. Huawei is a major customer in China.

Samsung Electronics is also considering expanding semiconductor production in the US in the mid to long term. Currently, it operates a foundry factory in Austin, Texas. The US government wants Samsung Electronics to expand the Austin factory, hire more personnel, and increase production. However, Samsung has already invested about 20 trillion won in the Austin factory, making immediate additional investment difficult. A Samsung official said, "We have continuously invested in semiconductors in the US," adding, "Decisions must be made considering various factors such as semiconductor supply and demand, outlook, and business conditions."

Intel, which has semiconductor factories worldwide including the US, Europe, and China, is also considering expanding its US factories. Intel is reportedly prioritizing expanding US factories over overseas ones in line with the US government's semiconductor self-sufficiency promotion and reshoring policy direction.

TSMC's US factory construction is expected to serve as a favorable "card" for the Trump administration ahead of the presidential election. Generally, large-scale semiconductor factories bring employment effects involving thousands of jobs. It is analyzed that TSMC's new factory could create about 1,600 jobs.

The construction of a US factory by a Taiwanese company could also be a card to pressure China. In an interview with Fox Business on the same day, President Trump said, "There is a lot we can do about China. We can cut all ties. If we cut ties, we can save $500 billion," adding, "I have a good relationship with Chinese President Xi Jinping, but right now I don't want to talk."