Taiwan’s semiconductor sector faces offshore production dilemma as island struggles for water, power, people
- Taiwan Semiconductor Manufacturing Company (TSMC) is set to open a US$40 billion compound in the United States in 2025
- But offshoring chip production could threaten its place as the world’s go-to for semiconductor pruduction and its US$820 billion economy
A US$40 billion compound in the United States to be operated from 2025 by Taiwan’s flagship semiconductor manufacturer may help its hosts win a race with mainland China for chip superiority, but has the potential to undermine the tech-reliant island economy.
Offshoring chip production could undo Taiwan’s semiconductor world dominance unless the industry solves a series of difficult problems at home, analysts said.
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip maker, will operate the site in Arizona, while it also plans to expand into Japan and Germany.
TSMC had a revenue of US$75 billion in the past financial year and its own network of lesser-known Taiwanese suppliers, but if they left, part of Taiwan’s economy could be affected.
At the core of this question is TSMC’s ability to remain the unassailable leader of the world’s semiconductor manufacturing process
“At the core of this question is TSMC’s ability to remain the unassailable leader of the world’s semiconductor manufacturing process,” said Rupert Hammond-Chambers, president of the US-Taiwan Business Council advocacy group.
“If that continues, Taiwan’s chip ecosystem remains central to the world’s commercial needs.
“There are some challenges, however, that relate more to public policy. Water and land issues impacting new investment are real and need to be managed in a way that prioritises the needs of the economy.”