A Taiwanese government minister has commented on the world’s largest contract chip maker, amid a military standoff between the island and communist China’s forces.

Reuters reported Taiwan’s Economy Minister Wang Mei-hua as saying that Taiwan Semiconductor Manufacturing Co Ltd, better known as TSMC, has not changed the investment plan for its new chip factory in the island’s southern city of Kaohsiung, in response to a media report of the chipmaker slowing down expansion at home.

The issue of TSMC is of strategic importance considering the vital role that Taiwan plays in the global supply chain for semiconductors.

Taiwan investments

“TSMC making Taiwan its global R&D hub and manufacturing hub has not changed,” Wang reportedly told reporters on the sidelines of parliament. “TSMC investing in Taiwan, investing in Kaohsiung, also has not changed.”

Wang’s comments come after Taiwan’s DigiTimes publication reported, citing sources, that TSMC is slowing down its expansion plans in Kaohsiung and other Taiwanese cities.

TSMC declined to comment, citing its quiet period ahead of quarterly earnings due next week.

Reuters noted that the chipmaker broke ground last year on its Kaohsiung plant, which will produce mature 28-nanometre semiconductors.

In 2021, TSMC said the Kaohsiung expansion would also include advanced 7-nanometre chips, but the company later postponed plans to build the advanced chips there.

TSMC is Asia’s most valuable listed company, and in January it said it expects softer demand due to a slowing global economy and would decrease its capital expenditure this year to $32-$36 billion, from $36.3 billion last year.

Strategic issue

Last month the retired founder of TSMC, Morris Chang reportedly said he supported US efforts to slow China’s advances in the semiconductor industry.

It came 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.

Last October Liu admitted that tensions between Taiwan and the US with China poses “serious challenges” for chip industry.

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.

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.

It is also building a chip factory in Japan.

China moves

Meanwhile, the Chinese government continues to plough billions into bolstering its domestic chip sector, but TSMC’s Chang said China’s chip manufacturing technology lags that of Taiwan by “at least five or six years.”

China’s President Xi Jinping recently 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.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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