Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday.
When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now.
“Unless TSMC completes its planned six wafer fabs in the US market to boost production sharply, its supply chain is not expected to go there to serve it now,” Kuo said, “their relocation may be seven to eight years away.”
Photo: CNA
Last month, TSMC pledged to pour additional US$100 billion in Arizona over the next few years to build three more advanced wafer fabs, two sophisticated IC packaging plants and one research and development center amid tariff threats posed by US President Donald Trump’s administration.
Currently, TSMC is investing US$65 billion to build three wafer fabs with the first having entered production this year and the second slated to begin commercial production by 2028. The chipmaker is seeking to break ground on a third fab as soon as possible.
Echoing Kuo, Premier Cho Jung-tai (卓榮泰) told lawmakers that the Executive Yuan has discussed with suppliers of chemical materials to TSMC and become aware that the chipmaker’s production volume in the US is currently not high enough for them to go there but as long as production expands to a certain extent, these suppliers will consider investing in the US.
In addition to the possible relocation of TSMC’s suppliers, Kuo said other industries such as printed circuit board makers and server producers are able to expand production capacity in their existing plants in the US to meet growing demand from American clients.
In response to media reports that the US government may force appreciation of the New Taiwan dollar against the greenback to boost competitive edge of goods made in the US, Cho said although the NT dollar stayed stable in a long run, how to maintain the stability of the foreign exchange rate could be a big challenge to the government.
The premier said the central bank has studied every possible scenario about the foreign exchange market carefully and will seek an appropriate time to tell the public the worst scenario.
Last week, the Taiwan Institute of Economic Research (台灣經濟研究院) warned that Trump may wage currency wars after the tariff threats, urging Taiwanese businesses to hedge against the possible appreciation of the NT dollar.
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