Founder of Asia’s most valuable company, TSMC, lends his backing to US efforts to slow China’s chip industry
A senior figure at the world’s largest contractor chip manufacturer TSMC (Taiwan Semiconductor Manufacturing Company Ltd) has made a surprising intervention concerning the tensions between China and the United States.
At a time of heightened geopolitical sensitivity, the retired founder of TSMC Morris Chang was quoted by Reuters as saying on Thursday that he supported US efforts to slow China’s advances in the semiconductor industry.
It comes after TSMC chairman Mark Liu last August warned about the likely impact on the world’s supply of semiconductors, if China were to invade Taiwan.
If China were to invade Taiwan, the most-advanced chip factory in the world would be rendered “not operable,” Liu said at the time.
Liu also said an invasion of the island would cause economic turmoil for China, Taiwan and Western nations.
Last October Liu then admitted that tensions between Taiwan and the US with China poses “serious challenges” for chip industry.
Into this comes this week’s comments from the retired founder of TSMC – Asia’s most valuable listed company.
Reuters reported that 91 year old Morris Chang as saying that even as he supported US efforts to slow China’s advances in the semiconductor industry, the “bifurcation” of the global supply chain and the reversal of globalisation would increase prices and reduce the ubiquity of chips that power the modern world.
“There’s no question in my mind that, in the chip sector, globalisation is dead,” Chang is quoted as saying at an event hosted by Taiwan’s CommonWealth Magazine. “Free trade is not quite that dead, but it’s in danger.”
“When the costs go up, the pervasiveness of chips will either stop or slow down considerably,” Chang reportedly said. “We are going to be in a different game.”
Chang reportedly remains an influential voice in Taiwan’s chip industry, despite being retired.
However not everyone agrees with him.
Last August a Taiwanese semiconductor industry veteran Charles Kau (formerly of Intel and TSMC) warned that Taiwan and South Korea could be “significantly impacted” if they join the so-called Chip 4 Alliance, which he described as being designed to deny mainland China access to advanced chip technologies and equipment.
TSMC, as the exclusive supplier of the Apple silicon chips used in iPhones and Macs, has recently been affected by disruption of iPhone assembly at a major plant in China’s Zhengzhou region – triggered by rising Covid-19 cases.
TSMC, according to Reuters, is widely regarded as the “sacred mountain protecting the country,” because of its economic importance.
It therefore plays an important role as China continues to ramp up its diplomatic and military pressure against Taiwan.
Western nations are concerned about the fate of chip fabs on Taiwan’s western coast, which produce the majority of the world’s most advanced chips, if China blockades or attacks the island.
TSMC’s Morris Chang also had some views of the efforts by the US and Europe to set up chip manufacturing facilities in their own regions, called “onshoring” or “friendshoring”, which he feels could present a predicament for Taiwan.
“Friendshore does not include Taiwan,” Chang was quoted by Reuters as saying. “In fact, the commerce secretary has said repeatedly that Taiwan is a very dangerous place, we cannot – America cannot – rely on Taiwan for chips. Now that, of course, is I think Taiwan’s dilemma.”
That said, TSMC is expanding its global production footprint, even as it keeps its most advanced technology in Taiwan.
Late last year, TSMC began construction of a second chip factory in Arizona which will start production in 2026, using advanced 3nm technology. The company’s total investment in the US project amounts to $40 billion.
Meanwhile, the Chinese government continues to plough billions into bolstering its domestic chip sector, but Chang said China’s chip manufacturing technology lags that of Taiwan by “at least five or six years.”
Last month China’s President Xi Jinping said his country must reach tech independence, and must resolve issues in key technological fields from the bottom up.
This is not the first time that President Xi has issued a rallying call to Chinese firms.
In October 2022 President Xi called for his country to “win the battle” on strategically important technologies, days after the US dramatically expanded trade sanctions aimed at crippling China’s tech initiatives