Taiwanese chip maker TSMC warns US-China deleveraging will drive up costs

TSMC, the world’s biggest contract chip manufacturer, expects the flow of information to become restricted and new tariffs erected amid a broader US-China trade war

Chairman Mark Liu said Taiwanese firms like TSMC have to improve their own technology in response to a deleveraging of US-China supply chains

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Flags of Taiwan and chip maker Taiwan Semiconductor Manufacturing Co are displayed next to the company’s headquarters in Hsinchu, the island’s seventh largest city by population. Photo: Reuters

Published: 7:00pm, 23 Sep 2020Updated: 7:00pm, 23 Sep 2020

The deleveraging of US-China supply chains and protectionism on both sides of the Pacific will only drive up costs and limit the flow of ideas, the chairman of Taiwan Semiconductor Manufacturing Co (TSMC) said on Wednesday.

The Trump administration has limited supplies to major Chinese tech firms like Huawei Technologies, viewing them as a security threat, and is encouraging US factories in mainland China to move home, part of a broader US-China trade war.

China, for its part, is trying to nurture tech champions of its own like Semiconductor Manufacturing Internatonal Corp, the country’s biggest chip maker, and wean itself off reliance on US suppliers.

Speaking at a semiconductor conference in Taipei, TSMC chairman Mark Liu said over the last four decades the industry had benefited from the free global flow of information.

Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co, warns of higher production costs and stiffer industry competition amid geopolitical tensions. Photo: Bloomberg

“But in the future the climate may change,” said Liu, whose company is the world’s biggest contract chip maker. “The information flow may not be that free. Tariffs may be erected. So we have to prepare for that.”

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