TSMC Defends Overseas Expansion Amidst Political Tensions
Taiwan’s TSMC defends investment in overseas plants to shareholders as geopolitical tensions between US and China continue to intensify
Taiwan Semiconuctor Manufacturing Co (TSMC) on Tuesday defended its overseas expansion plans to shareholders amidst unease triggered by intensifying geopolitical competition between the US and China.
At the company’s annual shareholder meeting shareholders challenged chair Mark Liu to explain why it is investing $40 billion (£32bn) in two US fabrication plants in addition to one it plans to build Japan and one it is considering in Germany.
Liu responded that the US plants were a “long-term development direction for TSMC” necessary to ensure it can “keep our position as global technology leader in the coming 10 to 20 years”.
“We must not assume that our current success will continue in the future,” he said.
Overseas expansion
Of the German construction plans, which are still in negotiations, he said “the feeling is not bad” and that the German government was promising a rapid build-up of capabilities to plug gaps in supply chain and labour.
He added that the US Commerce Department was open to addressing some of TSMC’s concerns over preconditions for the subsidies it is receiving in order to make the plant cost-competitive with facilities in Asia.
“Their goal is to make these investments in the US competitive,” Liu said.
He argued the high US costs were partly down to the fact that there had been little investment in chip manufacturing in the country for years, and that once the effort reached a certain scale “costs will start coming down”.
Concentration
TSMC’s overseas investments represent less than 10 percent of its total capital expenditure, and TSMC chief executive CC Wei told shareholders that the vast majority of the company’s most advanced manufacturing would continue to take place in Taiwan.
Western countries have pressured the company to diversify its manufacturing base amidst rising tensions with mainland China, forseeing a catastrophic supply chain rupture if the mainland should invade Taiwan in order to make good territorial claims that date back to the country’s 1927-1949 civil war.
TSMC’s 2018 decision to build two plants in Arizona was triggered by customer demands for the firm to create manufacturing capacity within the US for defence and sensitive infrastructure projects.
More than 90 percent of the world’s most advanced semiconductors are manufactured on the island – a consolidation that has taken place largely since the 1990s.
