The US is making broad plans to tackle a seemingly relentless chip crunch and boost supply chain transparency, going so far as to ask semiconductor firms to hand over information about their industry. With Taiwan Semiconductor Manufacturing Co (TSMC) playing a vital role in supplying chips to US heavyweights from Apple to Ford, the government must remain alert to the effects these efforts could have on the nation’s “sacred mountain.”
While there is no need to panic, the government needs to keep a clear head and prepare for new developments to help TSMC and other semiconductor firms stave off the worst effects of the chip crisis, as the US and Europe race to build up their own silicon supply chains.
Late last month, the US Department of Commerce asked firms in the semiconductor supply chain to provide within 45 days information about inventories, demand and delivery dynamics, to help the US understand shortages and identify possible hoarding. US Secretary of Commerce Gina Raimondo said the request was voluntary, but added that she might invoke the Cold War-era Defense Production Act or other tools to force companies to give up that information.
The announcement made waves in Taiwan after a BusinessKorea report said the disclosure of customer information to the US would have serious effects on the industry. The report also said that chip prices might be “significantly affected by disclosure of inventory and production data.” South Korea’s Samsung Electronics and SK Hynix are among the semiconductor firms the US asked to share that information.
Some legislators demanded a government response over concern that TSMC could risk losing its market lead to US rivals once crucial customer and corporate data were revealed. Some Chinese Nationalist Party (KMT) legislators even asked the government to lodge a complaint with the US, saying that it should not leave TSMC in the lurch. The worries are understandable as TSMC is a cornerstone of Taiwan’s economy. With revenue of NT$1.06 trillion (US$38.04 billion) and NT$750 billion of added value created in 2019, TSMC contributed at least 4 percent to Taiwan’s GDP. Any missteps would be costly.
Minister of Economic Affairs Wang Mei-hua (王美花) said the ministry was in close contact with local semiconductor companies and was monitoring the situation, adding that the US was not singling out TSMC. The ministry would promptly provide support as needed, she said.
TSMC said it would not give the US any confidential information about its customers. The chipmaker also said it did not hoard inventory, as it makes chips and builds capacity based on customer demand. The chipmaker also said it would seek government help if needed.
To mitigate the effects of an acute chip shortage, TSMC said it would boost output of microcontroller units, a key component used in vehicles, by 60 percent this year over last year’s level after a meeting with the White House.
It is premature to gauge how the US’ latest efforts to fix the chip crunch would adversely affect local companies. As the world’s top foundry service provider, TSMC should be cautious about its every move, as the global geopolitical crisis is weighing on semiconductor supply chains. With leadership in advanced technologies and strong customer portfolios, TSMC has gained a competitive edge over its rivals.
When it comes to the political front, it is the government’s responsibility to help TSMC and local chip firms handle, or avert, potential political influence, as the impact would be great. The nation’s entire chip industry and economy would be affected.
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