The U.S. Department of Commerce proposed on Monday to invest up to $6.6 billion to fund Taiwan Semiconductor Manufacturing Company's (TSMC) third factory in Arizona. This funding will be provided through CHIPS and the Science Act with the aim of promoting domestic semiconductor production.
The move represents a broader push to bring more manufacturing to the United States, but implicit in the noise about today's announcement is the potential for increased tensions with China. .
The proposed fab is a greenfield facility, meaning it will be custom built from the ground up. It will focus on 2nm (or higher) architectures designed for a variety of applications including computing, 5G/6G wireless communications, and of course AI. TSMC Arizona, the subsidiary behind the construction plan, said it would build the facility within 10 years.
The semiconductor manufacturer says construction will bring more than 20,000 jobs to the region, with about 6,000 manufacturing roles expected once the facility is operational.
Local manufacturing has become a key focus for the Biden administration as the coronavirus pandemic has exposed the vulnerabilities of global supply chains. These problems are exacerbated by the ubiquity of silicon in our daily lives. That number is only going to increase. According to the semiconductor industry group, global sales in January 2024 reached $47.6 billion, an increase of more than 15% from the previous year.
President Biden said, “TSMC's renewed commitment to the United States and investment in Arizona will continue to strengthen the ability of semiconductors made in the United States and with the strong support of America's leading technology companies to make the products we depend on every day.'' “It represents the broader story of manufacturing.” Releases related to news.
Much of the administration's funding has focused on U.S. companies like Intel, which the administration targeted with its own $8.5 billion proposal toward the end of March. But TSMC is the 800-pound gorilla in terms of both market share and technological advancements. But the company is in the midst of pressing geopolitical concerns. If China were to take control of Taiwan and its manufacturing capabilities, the United States and its allies would be at a major disadvantage.
TSMC has its own concerns about such a scenario. First, his two biggest customers at the company, Apple and his Nvidia, are American. For another, some in the United States have gone so far as to suggest their own bomb chip makers should such a thing become a reality.
“We need to make it clear to China: If they invade Taiwan, we will blow up TSMC,” Massachusetts Congressman Seth Moulton said at an event in May.
Democratic Party representatives later distanced themselves from the video, saying it had been selectively edited by the Chinese Communist Party. But he's not the only one making such suggestions. Earlier that year, Robert O'Brien, President Trump's national security adviser, said, “The United States and its allies will never put these factories in the hands of China,'' and that China would destroy them. suggested. Mr. O'Brien went so far as to compare these hypothetical actions to those of Britain during World War II.
The saber rattling has drawn international criticism. Beyond the clear ethical issues, such evasive action would have huge implications for the global economy. In addition to Apple and his Nvidia, TSMC also serves Sony, MediaTek, AMD, Qualcomm, Broadcom, etc.
Even as the U.S. government continues to invest, Intel is simply trying to catch up to TSMC's multi-year technological head start. TSMC manufactures approximately 90% of the world's most advanced chips. For now, the best defense the United States has against future disruptions, whether it's a pandemic or a geopolitical conflict, is supply diversification. This also applies to where and by whom the components are manufactured.
CHIPS and the makers of the Science Act no doubt want to boost the standing of American companies that manufacture domestically, but our economy is a global economy. TSMC certainly recognizes the value of decentralizing its supply chain.
“The proposed Chips and Science Act funding will provide TSMC with the opportunity to make this unprecedented investment and provide foundry services for cutting-edge manufacturing technology in the United States,” said semiconductor giant Mark Liu. the chairman said in a related release. news. “Our U.S. operations will allow us to better support our U.S. customers, which include some of the world's largest technology companies. will also expand.”
For those monitoring U.S.-China relations, the upcoming presidential election could be a key turning point. For example, former President Trump dramatically escalated trade tensions. Huawei's addition to the Entity List was a major setback for mobile companies, as they lost access to key components from US companies such as Google and Qualcomm.
Biden's former director of national intelligence, Avril Haines, said in a speech last year that if a U.S. invasion were to shut down Taiwan-based TSMC's products, “the global economic impact would be enormous and could last up to a year. “I think it's in the range of $600 billion to $1 trillion.” Yearly for the first few years. ”