Following the announcement by Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chipmaker, of a $100 billion (€92 billion) investment plan to construct factories in the United States, there is a growing concern that offshoring production could diminish Taiwan’s bargaining power in securing protection against China.

TSMC is responsible for manufacturing many advanced semiconductors that are integral to a wide range of products, from smartphones to fighter jets. However, as China is determined to “reunite” Taiwan with the mainland, possibly through force, the vulnerability of the global semiconductor supply chain becomes a critical strategic factor.

In response to these tensions, US Presidents Donald Trump and Joe Biden have championed the idea of relocating advanced chip production to the United States. During his reelection campaign, Trump accused TSMC of “stealing” the US chip industry without providing evidence. In 2020, TSMC committed billions of dollars in investment to establish chip foundries in the southwestern US state of Arizona. The first plant commenced production in 2024, with a second facility expected to start operations in 2028.

The TSMC expansion in the US, now totaling $165 billion, was insistently supported by TSMC Chairman CC Wei and Taiwanese President Lai Ching-te, who maintained that the decision was driven by customer demand and assured that the company’s most advanced technology would remain in Taiwan.

Despite these assurances, concerns persist about Trump’s threats of tariffs on chips manufactured in Taiwan, alarming many Taiwanese who question how producing chips in the US at higher costs can be financially viable. The worry is that shifting advanced chip production could erode Taiwan’s high-tech industry and compromise national security.

Taiwan’s central role in the global semiconductor supply chain, producing around 60% of the world’s chips with TSMC as the main contributor, has been seen as a “silicon shield” against potential invasion by China. The expansion plans have sparked debate over the future of Taiwan’s semiconductor industry and its position vis-à-vis US policies and security concerns.

Chinese and US interest in Taiwan is intense, as both superpowers see strategic importance in chip production, which is crucial for maintaining their technological prowess and military capabilities. The situation underscores the geopolitical importance of Taiwanese semiconductors in a global supply chain that is pivotal to maintaining peace and serves as a deterrent against aggressive actions from China.

Source: https://www.dw.com/en/tsmc-chip-plans-in-us-fuel-china-security-fears-in-taiwan/a-71877492?maca=en-rss-en-all-1573-rdf