Is TSMC’s Arizona project a US tech supply chain win? Or a cautionary tale?
- US trade officials say the Taiwan Semiconductor Manufacturing Company pledge to build a US$12 billion plant is example of bringing tech supply chain home
- But analysts note the process of ramping up can drag on, and attracting essential suppliers is far from easy
When the Taiwan Semiconductor Manufacturing Company pledged US$12 billion last month to build a chip factory in Arizona, US trade officials hailed the project as progress in their drive to lure foreign tech companies to American soil.
But the Trump administration’s objective – moving the tech supply chain from overseas and to the US – will be far from easy.
In committing to the eye-popping investment, TSMC became a prime example of the Trump administration’s drive to relocate critical supply chains.
For TSMC, the deal may also help the chip maker win US approval to keep selling to its second-largest customer, Huawei Technologies – the Chinese telecommunications giant the US has urged global suppliers and governments to cut ties with.
“This investment is a way for TSMC to gain leverage. I'm betting they will get the licenses to continue to sell to Huawei. If they don't, they will slow-walk and maybe even completely walk away from [the project]. This will be very bad for Trump in the run-up to the election,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics.
“They are in a stronger position than most people recognise. They don’t have to make the investment,” Lardy added.