TSMC feeling pressure from US to avoid expansion in China

Posted on Thursday, Jul 08 2021 @ 15:16 CEST by Thomas De Maesschalck
Word is going around that TSMC is under pressure over its planned factory expansion in China. The Taiwanese foundry intends to increase the production capacity of its Nanjing plant, but TechPowerUp reports TSMC is seeing backlash from US entities. It's unknown whether this is diplomatic pressure from the US government or pressure from TSMC's US-based customers. It could also be a combination of the two.

Over the past couple of decades, TSMC has come out as the leader in terms of semiconductor production. There are only a couple of companies in the world that are able to offer cutting-edge foundry services. TSMC is the largest and has most of its operations in Taiwan. Samsung ranks second and is primarily located in South Korea. In the near future, Intel hopes to grab marketshare in this booming market.

In the meantime, the dominant position of TSMC has important geopolitical implications. Both the US and the EU are keen on building up domestic chip production to reduce reliance on foreign chips.
The same forces were possibly behind getting TSMC to invest north of $3.5 billion toward a facility in Arizona with six more "Gigafabs" being planned in the southwestern state. U.S. hand-holding in TSMC's policymaking could be part of a strategy to deny cutting-edge silicon fabrication technology to China (PRC), and to help TSMC expand its manufacturing in safer regions as the security situation across the Taiwan strait continues to deteriorate. TSMC, specifically western tech companies' dependence on it, makes it a soft target on the island, and a bargaining chip to deter western military intervention.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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