BIG IDEA | ‘Taiwan Semiconductor Manufacturing Company (TSMC) has maintained its historic position of neutrality, reflected in the company’s strategy of “being everyone’s foundry”.’

‘Now the big question for TSMC and other Taiwanese groups on whether to commit themselves to the larger US market, or to faster-growing China.’
‘Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker is under pressure to pick a side in the US-China rivalry for technological supremacy, posing a dilemma for a company that has become crucial to the global supply chain.’

‘The big question for TSMC and other Taiwanese groups on whether to commit themselves to the larger US market, or to faster-growing China.’

‘The Washington Post reported that Chinese supercomputer maker Phytium used chips made by TSMC, which is also an important US military supplier, in machinery to test hypersonic missiles for the People’s Liberation Army.’

• ‘The US Commerce Department placed Phytium and six other Chinese supercomputing companies on its “entity list” last week, barring American suppliers from exporting directly to the company without a special licence.’
• ‘The rules do not apply to overseas companies, but TSMC and a Taiwanese chip designer have both proactively halted sales to Phytium.’

‘Washington’s moves showed that “the US is pressuring Taiwan and TSMC to support its supply chain” over China, said Paul Triolo, an analyst at consultancy Eurasia Group.’

• ‘They also challenge TSMC’s historic position of neutrality and the company’s strategy of “being everyone’s foundry”.’

‘The US last year accounted for over 60 per cent of TSMC’s sales, compared with only 20 per cent to China.’

• ‘However, the latter is the fastest-growing market for semiconductors, making China a lucrative opportunity for TSMC as “Chinese tech firms make cutting-edge consumer electronics, a huge source of growth for TSMC's advanced nodes”, added Triolo.’

‘Washington’s efforts to draw TSMC away from Beijing have extended to the chip company moving parts of its supply chain on to American soil.’

• ‘Last May, under pressure from the Trump administration, TSMC announced plans to open a plant in Phoenix, which would bring it closer to the operations of US military manufacturers Raytheon and Honeywell.’
• ‘Washington wants sensitive technology, such as the TSMC computer chips used in F-35 stealth fighter jets, to be manufactured in the US.’

‘Su Tzu-yun, a director at the Taipei-based Institute for National Defense and Security Research, believed that a recent escalation in tensions between China and Taiwan meant the island’s tech companies had little choice but to side with the US.’