TSMC has opened a large new domestic fab in Taiwan. The new facility, claimed the Taiwan Semiconductor Manufacturing Company, would bring 7,000 jobs to the island, and bucks concerns among some industry watchers that the chipmaker was diluting its presence in its home country – thereby increasing the risk of invasion from its much larger neighbour, China.
“We’ll continue to look for space to expand investments in Taiwan,” said TSMC’s executive vice-president and co-COO, Y.P. Chyn, in comments made during the new fab’s opening ceremony and reported by Reuters. He added that the facility will be capable of producing advanced 2 nanometre (nm) wafers by the second half of this year.
TSMC’s global position
Founded in 1987, TSMC works by a contract manufacturing model, wherein clients including Nvidia, Broadcom and Qualcomm commission the Taiwan-based firm to build a variety of advanced semiconductors. The model has proven wildly successful, pushing out all but two multinational rivals from the advanced chipmaking manufacturing sphere: Intel and Samsung.
That success has endured into the present era of growing trade protectionism, as multiple nations – scarred by the breakdown of worldwide supply chains during the pandemic and the manipulation of tariffs by both Trump administrations – nearshore chip production. TSMC has adapted accordingly, announcing the construction of new facilities in both Germany and the US, where it announced an additional investment of $100bn earlier this month.
The opening of a new advanced semiconductor manufacturing facility in Taiwan, however, appears to reaffirm TSMC’s commitment to its home market and original benefactor. The “most important foundations [of TSMC] will remain in Taiwan,” said the Taiwanese premier, Cho Jung-tai while thanking the firm for opening its new 2nm manufacturing facility in the country. “TSMC will always be our national team.”
Nearshoring dilemmas
The expansion of Taiwan’s chipmaking facilities also arguably deters an invasion from China, which has claimed sovereignty over the island since 1949. Military action would, foreign policy analysts contend, trigger a global chip supply shock, one of several reasons why previous US administrations have committed to Taiwan’s defence. Ironically, global pressure for TSMC to diversify its supply chains has led some analysts to fear that commitment could be diluted over time, as the company opens more facilities in Europe and North America.
On Friday, former Intel chief executive Pat Gelsinger cast doubt on whether TSMC’s recent $100bn investment in new US factories would help the latter nearshore chipmaking. Most of the company’s advanced facilities, he said, would inevitably remain in Taiwan. “If you don’t have R&D in the US, you will not have semiconductor leadership in the US,” Gelsinger said to the Financial Times. “All of the R&D work of TSMC is in Taiwan, and they haven’t made any announcements to move that.”
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