Less than 15 percent of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) advanced manufacturing processes are expected to be relocated to the US by the end of US President Donald Trump’s second term in office, Chung-Hua Institution for Economic Research president Lien Hsien-ming (連 賢明) said yesterday.
Lien made the remarks in a Facebook post commenting on recent statements by US Secretary of Commerce Howard Lutnick, who told CNBC that Washington aims to bring 40 percent of Taiwan’s supply chain to the US before Trump’s term ends in 2029.
TSMC is investing US$65 billion to build three fabs in Arizona, with the first starting commercial production in the fourth quarter of 2024. The chipmaker has also pledged an additional US$100 billion to construct three more fabs, two IC packaging plants and a research and development center in the US.
Photo: I-Hwa Cheng, AFP
Citing TSMC, Lien said equipment installation has begun at the second Arizona fab, which is scheduled to start mass production next year, while construction of the third fab started earlier this year. TSMC is also applying for a permit to build a fourth fab.
Given the construction timeline, Lien said it is unlikely TSMC will be able to achieve mass production at its third Arizona fab by the end of Trump’s term, let alone at a fourth facility.
After factoring in TSMC’s Arizona schedule and its overall output of advanced chips, Lien estimated that less than 15 percent of the company’s high-end processes would be located in the US by the end of Trump’s presidency.
The economist added that TSMC is not the only semiconductor company expanding advanced manufacturing in the US, noting that Intel Corp, Micron Technology Inc and Samsung Electronics Co are also stepping up their investments. If those projects proceed smoothly, pressure on TSMC from the US government could ease, he said.
Lutnick made the comments as the US and Taiwan signed a tentative agreement last week to cut tariffs on Taiwanese goods from 20 percent to 15 percent.
Under the agreement, Taiwanese semiconductor, electronics manufacturing service (EMS), artificial intelligence and energy companies will invest US$250 billion in the US, while Taiwan’s government will provide up to US$250 billion in credit guarantees to support investments by the semiconductor and information and communication technology sectors, the Executive Yuan said on Friday.
However, Lutnick said in the CNBC interview that Taiwan had pledged US$500 billion in US investments, describing the amount as merely a down payment toward bringing the chip industry back to America.
Lien said the public should not be alarmed or discouraged by Lutnick’s remarks, stressing that Taiwan has committed only US$250 billion in direct investment, with the remaining US$250 billion consisting of credit guarantees.
He added that Lutnick has repeatedly overstated TSMC’s investment commitments as a way of exerting pressure on Taiwan, noting that similar tactics have been employed toward Japan and South Korea.
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