Taiwan, TSMC Worried About Losing to the US... Growing Controversy Over Job Cuts and Technology Leakage [Taiwan Chip News]

TSMC to Invest Additional $100 Billion in the U.S.
Currently Over 90% of Production Based in Taiwan
Domestic Production Share Expected to Drop to 75-80% Due to U.S. Investment
Some Factories in Taiwan May Be Forced to Close

TSMC, the world’s No. 1 foundry (semiconductor contract manufacturer) company praised as Taiwan’s “National Treasure (Gukbo)” and “Sacred Mountain (Shinsan),” announced additional investment plans in the United States on the 3rd (local time). Since then, Taiwan has been anxiously worried about losing TSMC to the U.S. Concerns are spreading that TSMC will eventually relocate its production base to the U.S., as it seems inevitable that the share of domestic production will gradually decrease.

Chairman Wei Zhaojia of TSMC and U.S. President Donald Trump

According to local reports such as Taiwan Economic Daily on the 10th, Liu Peizhen, Director of the Industrial Database at the Taiwan Institute of Economic Research, forecasted right after TSMC’s announcement of its U.S. investment plan that “the share of production in Taiwan will gradually decrease to 75-80% over the next few years.” Currently, TSMC produces the majority of chips ordered by its customers in Taiwan, with the domestic production share reportedly exceeding 90%. However, the situation is likely to change. If TSMC invests heavily in building factories and expanding production capacity in the U.S., a significant shift in the production focus from Taiwan to the U.S. is expected. This analysis is likely to materialize if cutting-edge manufacturing facilities are established in the U.S. In January, TSMC Chairman Wei Zhejia stated during the announcement of the fourth-quarter results of last year that “mass production of semiconductors using advanced processes must be accompanied by research and development (R&D), so advanced processes are only possible in Taiwan, not the U.S.” However, there is now a possibility that this stance could be reversed within just two months. Director Liu analyzed, “Since R&D resources and personnel in Taiwan will also have to move to the U.S. along with TSMC, the importance of advanced manufacturing in Taiwan’s semiconductor industry as a whole is likely to gradually decline.”

Earlier, on the 3rd, TSMC Chairman Wei Zhejia announced at the White House that the company would pour an additional $100 billion (approximately 145 trillion KRW) into the U.S. and build three more semiconductor factories and two advanced packaging and testing plants in Arizona. Accordingly, in addition to the three factories previously planned, TSMC will have a total of eight factories in the U.S., where it is expected to produce most of the chips ordered by customers. Director Liu pointed out, “This expansion of investment means that the U.S. will become TSMC’s main production base in overseas markets in the future, and additional investment plans for other overseas factories in countries such as Japan and Germany are unlikely to proceed.”

If TSMC increases the share of chip production in the U.S., Taiwan may face issues such as job reductions, rising unemployment, and technology leakage from TSMC factories. TSMC currently operates nine wafer factories, five advanced packaging plants, and one global research center in Taiwan. There is growing speculation that some of these may close if TSMC focuses more on the U.S. TSMC, aware of these concerns spreading in Taiwan, has stated that it will “balance the production shares between Taiwan and the U.S.,” but the worries do not seem to subside easily. However, Director Liu predicted, “The situation will vary depending on when TSMC’s factories in the U.S. actually start mass production and what advanced processes they adopt.” He also added that it will be important to watch whether Taiwan’s material, parts, and equipment (SoBuJang) partner companies, which have built the semiconductor supply chain alongside TSMC, will also enter the U.S. market together.

There were also positive evaluations. Director Liu regarded the additional investment announcement as positive in that TSMC has escaped the pressure from the Trump administration to “save Intel.” He also believed that the U.S. is likely to withdraw tariffs on Taiwanese semiconductors. He added, “Through investment in the U.S., TSMC can check its foundry competitors Intel and Samsung, while simultaneously seizing opportunities to utilize U.S. resources such as electricity, water, and land.”

Taiwan Economic Daily News = Reporter Chen Shuling / Translation = Asia Economy

※ This column is published through a strategic partnership between Asia Economy and Taiwan Economic Daily News.