Taiwan Semiconductor Manufacturing Company (TSMC) is the largest chipmaker in the world, and it has been one of the most valuable assets for Taiwan’s economy. However, in recent years, TSMC decided to expand its operations to Arizona. While this decision has been viewed positively by the US, it has raised concerns in China, which is keenly observing TSMC’s Arizona project.
Why is TSMC expanding to Arizona?
In December of 2022, TSMC made two significant announcements regarding their manufacturing plants. Firstly, the construction of their TSMC Arizona fab, set to begin production of N4 process technology in 2024, is well underway. Secondly, TSMC revealed that they have started building a second fab that will commence production of 3nm process technology in 2026.
TSMC had announced their first Arizona factory in May 2020 with a $12 billion investment pledge. In December 2022 , the company increased their investment to $40 billion.
According to The New York Times, Kirk Yang, chairman of the private equity firm Kirkland Capital and a former tech analyst, believes that TSMC’s investment in the US “makes no sense at all” from a business perspective due to high costs. He suggests that TSMC may have been compelled to establish a factory in the United States due to political considerations rather than sound business strategy.
The newspapers further commented, “The Arizona project is TSMC’s first major concession to rising global concerns in recent years about the geopolitics of chip production, driven partly by fears over China’s hostile posture to Taiwan and over a chip shortage.”
How China sees TSMC’s Arizona Project
The US Treats Taiwan as a Sacrificial Pawn
On March 1, 2023, an opinion piece in the Chinese Communist Party-owned newspaper China Daily referred to Alex Tsai Cheng-yuan, a former member of Taiwan’s unicameral legislature ‘Legislative Yuan’, who expressed his anger at TSMC’s decision to invest in the US. Tsai fears that if TSMC’s employees refuse to relocate to the US, the US may bomb the company. This echoes a report from October in the US media that claimed the US would bomb TSMC if there was reunification between the Chinese mainland and Taiwan.
In a sense, Tsai has highlighted the US’s treatment of Taiwan as a disposable pawn, claimed the newspaper. TSMC is Taiwan’s most precious resource, but for the US, it is expendable. If necessary, the US will relocate TSMC to its own territory, and if that does not suffice, it will not hesitate to abandon it, added China Daily.
The newspaper didn’t forget to mention the recent revelation of the US’s involvement in bombing Nord Stream Pipelines which were critical for Germany and other US allies.
Tsai Ingwen’s Stance
China Daily has criticized Taiwan’s President Tsai Ingwen’s position on TSMC’s Arizona Project. The publication suggests that Tsai is unaware of the US’s intentions and has always supported the US in their attempts to contain China. However, the newspaper fears that this stance may prove harmful to TSMC’s interests in the long run. In the event of failed peaceful reunification with China, TSMC could become a target of US aircraft carriers, which Taiwan would be unable to protect the company from.
As a solution, the newspaper suggests that TSMC needs a strong motherland to protect its interests, which can only come from early reunification with the mainland.
FAQs
How much is TSMC investing in Arizona?
USD 40 billion. TSMC made an announcement on December 6, 2022, stating that the total investment for its two fabs in Arizona will amount to around US$40 billion. This marks the largest foreign direct investment in Arizona’s history and is among the largest foreign direct investments in the history of the United States.
