As US lawmakers look to invest $52bn in the American chip industry, the founder of Taiwan Semiconductor Manufacturing Company calls the plan far too small for rebuilding a complete supply chain in the country.
Morris Chang, a US citizen who founded the group that is now the world’s most valuable chipmaker, says it would be impossible for the US to have a full chip supply chain onshore even if it spent far more — and that such a move may not be financially desirable in any case.
“If you want to re-establish a complete semiconductor supply chain in the US, you will not find it as a possible task,” Chang told a tech industry forum in Taipei on October 26. “Even after you spend hundreds of billions of dollars, you will still find the supply chain to be incomplete, and you will find that it will be very high cost, much higher costs than what you currently have.”
The US accounted for 37 per cent of global semiconductor manufacturing in the 1990s, but has fallen to 12 per cent, Semiconductor Industry Association data show.
Washington is campaigning to bring more chip production on to US soil, amid concern about an overreliance on Taiwan. The US Senate this year passed a $52bn bill to support domestic semiconductor manufacturing and R&D, though the package has yet to become law.
Chang, who retired from TSMC in 2018, claimed that some people arguing for bringing the chip supply chain onshore were driven by self-interest. Intel chief executive Pat Gelsinger advocated for more manufacturing in the US as “it is not safe in Taiwan and it is not safe in South Korea”, Chang said, while Intel hoped to secure funding from the $52bn subsidy package.
Rethinking the supply chain would be a challenge for everyone, Chang said.
“In the past, companies in the US or in Asia were growing and prospering thanks to globalisation and free trade,” he said. Chang cited Thomas Friedman’s book, The World Is Flat, in which the commentator analyses globalisation and the opportunities it creates for nations.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
“Well, Tom, the world is not flat any more,” he said. “This is going to be a challenge for the Asian semiconductor industry, global semiconductor industry, including Intel.”
Chang’s comments were the first time he directly and publicly questioned Washington’s efforts to rebuild semiconductor manufacturing. His criticism comes despite TSMC’s move to build an advanced chip facility in the US state of Arizona in response to the government’s campaign.
Previously, Chang had said government efforts around the world to increase chip production could backfire, without specifying which countries. Sandra Oudkirk, director of the American Institute in Taiwan and the top US diplomat in Taipei, was among the audience at the industry forum.
Europe, Japan and China also are gearing up to boost production at home, offering government aid to ensure that chips — which enable devices from smartphones to military techs — will remain within their countries.
TSMC recently announced that the company will build its first chip facility in Japan, where Prime Minister Fumio Kishida said his government would support large-scale private-sector investment.
A version of this article was first published by Nikkei Asia on October 27 2021. ©2021 Nikkei Inc. All rights reserved.
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