A newspaper report last week that Taiwan Semiconductor Manufacturing Co (TSMC) had formally listed the US as a possible location for its most advanced manufacturing factory spooked both the industry and the government, raising market concern over the nation’s investment prospects.
While the company said it would make a decision in the first half of next year on where to build its next chip plant, the newspaper report prompted Minister of Science and Technology Chen Liang-gee (陳良基) to telephone TSMC chairman Morris Chang (張忠謀) and afterward declare that Taiwan remains a priority for the firm in terms of new investments.
Even though both TSMC and the Ministry of Science and Technology tried to play down the issue last week, the ministry’s knee-jerk reaction and promise to view the company’s concerns as a special case indicate that TSMC’s planned NT$500 billion (US$16.4 billion) investment in a new plant is crucial to the nation’s economy.
Given the company’s annual US$10 billion in capital expenditure, a record net profit of NT$334.25 billion last year, the nine fabs it operates in Taiwan and the 45,000 or so people it employs worldwide, it is no wonder that the Ministry of Economic Affairs, the Environmental Protection Administration and the Kaohsiung City Government all last week said that they would do their best to ensure the company continues to invest in Taiwan.
TSMC had previously said that it would prioritize building a 3-nanometer or 5-nanometer factory in Taiwan. With its growing importance in the global semiconductor and components supply chains, the company might be lucky enough not to have serious problems with its investments in Taiwan, as government agencies would likely shorten the time needed to process environmental impact assessments of a possible site at the Southern Taiwan Science Park in Kaohsiung’s Luzhu District (路竹), as well as provide it with stable water and power supplies.
Chen last week said the science ministry would collaborate closely with TSMC to meet the firm’s fab plan demands, but it should not do that just for TSMC. The government needs to be proactive in ensuring that policies and measures to develop a favorable investment environment are there for all companies.
Local businesses for years have called on the government to address their concerns over the water and power shortages during peak production times, yet officials appear to have turned a deaf ear to their concerns.
Taiwan has seen sluggish progress in domestic investment for several years, which has not only seriously affected the economy’s growth potential, but also become one of the major sources of drag on innovation and productivity, further threatening the nation’s long-term competitiveness.
At a time when several local businesses have said they would not rule out building plants in the US amid the new US president’s push to create more jobs in that nation, the government needs to do much more to allow more plants to be constructed in Taiwan, not the other way around.
Uncertainty surrounding the government’s industry policy and unstable supplies of water and electricity pose the biggest risks to business investments in this nation.
Despite its pledge to build a quality environment where talented professionals and advanced technology can thrive, the government has to be capable of solving problems when businesses run into trouble.
However, one still has to hold a relatively conservative view. Judging from the government’s recent responses to the problems caused by the implementation of new labor rules, whether Taiwan can attract major investments from the private sector this year — or in the future — remains to be seen.
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