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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
Tech

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
Semiconductors
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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.”

“One thing is the competition will be stronger,” he said. “Secondly, the cost of production or development will be higher because one cannot leverage the whole world like in the past.”

Taiwanese firms like TSMC – a major supplier to the likes of Apple and Qualcomm – have to improve their own technology to respond and remind the world how important the island’s companies are, Liu said.

“Because either side of the Pacific is trying to do their self-sufficient supply chains. They want to do it themselves,” he said. “Use Taiwan’s engineers’ ingenuity to lift our technology level up.”

TSMC, which has become caught up in tensions between Washington and Beijing, said in July that it had stopped taking new orders from Huawei in May and did not plan to ship wafers after September 15, responding to US curbs on supplying the Chinese telecommunications equipment giant.
TSMC also plans to build a US$12 billion factory in Arizona, in an apparent win for the Trump administration’s efforts to wrestle global tech supply chains back from China.
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