TSMC’s expansion in US sparks concern over damage to Taiwan’s economy
Published: Dec 07, 2022 06:12 PM Updated: Dec 07, 2022 06:06 PM


Taiwan Semiconductor Manufacturing Co (TSMC) said that it would more than triple its planned investment at its plant in the US state of Arizona to $40 billion to build the most advanced 3 nanometer (nm) chips, sparking growing concerns over potential damage to Taiwan island’s economy.

Industry analysts said that TSMC’s moves in the US, which came under intense political pressure exerted by Washington, may lead to a trend that could “empty” the island’s industrial base and harm the long-term health of the regional economy.

According to a report by Reuters on Wednesday, there is a “goodbye Taiwan” trend among chip firms. TSMC also said that it would build a second facility nearby the new plant to produce so-called 3 nm chips by 2026, the most advanced currently in production.

US President Joe Biden said during a visit to Arizona that TSMC is investing $40 billion in Arizona, which is the largest foreign direct investment in the history of the state, while over 10,000 construction jobs and 10,000 high-tech jobs will be created, according to the White House. “American manufacturing is back,” Biden said. 

Ma Jihua, a veteran telecom industry analyst, said that the new TSMC plant in the US has become an example for the Biden administration to show to the US public that it has made some progress in achieving chip independence or decoupling; however, the move would harm Taiwan island by "emptying" its industrial base. 

"After the plant is built, there will likely be ensuing migration of talent and technology from Taiwan island to the US as well. It is damaging to Taiwan's economic health," Ma told the Global Times.

Ma added that Taiwan has been highly reliant upon chip exports. "If the US is capable of making the chips by themselves, what could Taiwan rely on for economic output in the future?" he questioned.

According to Ma, as the Taiwan public realizes the extent of the situation, they will also have concerns about the hollowing out of the local industry. "It's not clear if Taiwan will allow 3 nm chips to be produced in the TSMC’s US plant, as this is also subject to ongoing back and forth."

Global Times