Tensions With China Pose ‘Serious’ Challenges For Chip Sector, Says TSMC

The chairman of Taiwanese chipmaker TSMC has waded into the ongoing tensions between Taiwan and the United States on the one side, and China on the other.

Taiwan Semiconductor Manufacturing Co (TSMC) is of course the world’s largest contract chip maker, and now its chairman has stated the rising geopolitical tensions between the two sides have brought “more serious” challenges for the semiconductor industry, Reuters reported.

This is not the first time that TSMC’s chairman Mark Liu has waded into this issue. Soon after US House of Representatives Speaker Nancy Pelosi visited Taiwan in August, China began provocative naval exercises near the Taiwanese coastline.

Invasion comments

At the time Pelosi also met with TSMC chairman Mark Liu, during which the two figures discussed the recently passed CHIPS and Science Act in the US.

After that visit TSMC’s chairman 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,” TSMC Chairmain Mark Liu told CNN at the time.

“Nobody can control TSMC by force,” said Liu. “If you take a military force or invasion, you will render TSMC factory not operable,” Liu said. “Because this is such a sophisticated manufacturing facility, it depends on real-time connection with the outside world, with Europe, with Japan, with US, from materials to chemicals to spare parts to engineering software and diagnosis.”

“The war brings no winners, everybody’s losers,” Liu said at the time.

Liu compared a potential conflict in Taiwan to Russia’s invasion of Ukraine, saying that while the two conflicts are very different, the economic impact to other countries would be similar.

He encouraged political leaders to try to avoid war.

“Ukraine war is not good for any of the sides, it’s lose-lose-lose scenarios,” Liu said back in August.

Liu also said an invasion of the island would cause economic turmoil for China, Taiwan and Western countries.

Serious challenge

Besides being the world’s largest chip maker, TSMC is also the most valuable company in all of Asia.

It is also the tenth most valuable company in the world.

Now TSMC Chairman Mark Liu has again talked about the tense geopolitical issue when speaking at the Taiwan Semiconductor Industry Association’s annual convention.

“The US-China trade conflict and the escalation of cross-Strait tensions have brought more serious challenges to all industries, including the semiconductor industry,” said Liu.

In recent years, China’s government has “never stopped promoting its domestic semiconductor industry”, including chip design, manufacturing, and packaging, he was quoted by Reuters as saying.

The United States has also passed its CHIPS Act to vigorously support local research and development and manufacturing, Liu said.

Liu said he looked forward to Taiwan’s industry, government and academia developing “more concrete, constructive measures” on industrial policies related to innovation, research, talent education and retention “to maintain Taiwan’s most critical semiconductor industry advantages”.

TSMC will likely be among its beneficiaries of the US CHIPS act, as a result of the $12 billion chip factory it is planning to build in Arizona.

Liu noted that this year the “industry value” of Taiwan’s chip sector is expected to have risen one-fifth compared with 2021, even with the impact of Sino-US trade friction and geopolitical problems.

While Liu did not make direct mention of it, the sweeping set of export controls announced by the United States this month, aimed at slowing China’s progress in advanced chip manufacturing, is expected to also impact Taiwanese chipmakers.

The new rules require US companies to cease supplying Chinese chipmakers with equipment to make relatively advanced chips, though Washington has granted some non-Chinese companies operating in China one-year licenses.”

“The difficulty this time will be a very big challenge,” Nicky Lu, chairman of Taiwan chip design firm Etron Technology told reporters ahead of the event. “No one will escape the impact.”

Frank Huang, chairman of Powerchip Semiconductor Manufacturing Corp , was quoted by Reuters as saying that the sector was caught in a difficult situation.