Taiwan Semiconductor Manufacturing Company (TSMC)
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Taiwan Semiconductor Manufacturing Co says its response to the US request for data related to the global chip shortage omitted confidential customer information. Photo: Shutterstock

Chinese critics express dismay over Taiwan chip maker TSMC’s compliance with Washington’s semiconductor data request

  • State-owned media and mainland Chinese social networks are rife with speculation about the potential threat posed by TSMC’s response to the US data request
  • TSMC earlier assured that it would withhold confidential customer information ahead of Washington’s November 8 deadline for submitting data
Beijing has refrained from any direct criticism of Taiwan Semiconductor Manufacturing Co (TSMC) after the world’s largest contract chip maker responded to Washington’s request for supply chain information, but that has not stopped a swirl of speculation about the potential impact of the company’s move on mainland Chinese industries.
The US Department of Commerce’s request for such data was described as “an extortion of confidential information from chip firms” in an article published on Monday by Global Times, a daily tabloid that is an arm of People’s Daily, the Chinese Communist Party’s mouthpiece.
The Beijing Daily, meanwhile, posted on the same day a widely shared article on social media platform WeChat about how the ruling Democratic Progressive Party in Taiwan was too weak to support TSMC in turning down the US request. Beijing’s Taiwan Affairs Office had earlier blamed the island’s government for failing to protect local companies from Washington’s pressure.
TSMC’s decision to comply with the US request has also become one of the hotly debated topics on Chinese microblogging service Weibo, with users discussing the move’s potential threat to national security and mainland China’s own semiconductor ambitions.
The Taiwanese firm, which plans to expand its chip fabrication facility in the eastern city of Nanjing, assured in October that it would “respond to the request without providing customers’ confidential information”, ahead of the November 8 US deadline to submit data related to the ongoing global chip shortage.
South Korean memory chip makers Samsung Electronics and SK Hynix also planned to omit detailed information in their submission because they want to protect trade secrets, according to a Reuters report last Friday that cited two sources briefed on the matter.
An aerial view shows Taiwan Semiconductor Manufacturing Co’s chip fabrication facility in Nanjing, capital of eastern Jiangsu province, on May 5, 2021. Photo: VCG via Getty Images

Semiconductor analysts indicated that the data submissions made to the US Commerce Department pose no threat to the world’s second-largest economy.


“There isn’t much of a threat, actually,” said Sravan Kundojjala, a senior analyst at Strategy Analytics. “This seems like a standard practice, without violating customer rights.”

In September, the US Commerce Department asked domestic and foreign companies involved in the semiconductor industry to submit supply chain information to better understand the current global chip shortage. Other information in the US survey includes applied technology, product types, inventory data, order backlogs, delivery time and information on each product’s top three customers.

“TSMC is a customer-centric company,” Kundojjala said. “They handed a forecast for 2021, which is public information anyway. TSMC already discloses China revenue contribution in its quarterly reports.”

What the speculation in mainland China about TSMC’s data submission reflects is the mistrust caused by tensions between Beijing and Washington, which have been locked in a tech war and trade rivalry.
TSMC, which is a major supplier to Apple and Qualcomm, used to be a contract chip manufacturer for telecommunications giant Huawei Technologies Co, the Shenzhen-based company that was formerly China’s biggest smartphone vendor. Huawei, which was blacklisted by Washington in 2019, has been restricted from access to chips developed or produced using US technology, from anywhere, under US trade sanctions.

Some see US request for chip supply data as targeting Chinese industry

Fear that Chinese companies’ sensitive information will go to the US is the sentiment on the mainland, according to Stewart Randall, head of electronics and embedded software at consultancy Intralink. But he said it was doubtful whether any state-owned institutions ranked in the top three customers of TSMC.


Last year, 17 per cent of TSMC’s revenue was generated from customers in mainland China, compared to 62 per cent from North America, according to the Taiwanese company’s annual results.

The prospect that the US government may demand more data in the future is the worry, according to Gary Ng, senior economist for Asia-Pacific at investment bank Natixis. “If firms are asked to provide more sensitive information regularly in the future, it may give the US an advantage in its competition with China,” Ng said. “But the probability of that happening is not very high because it would prompt a backlash from the semiconductor industry.”

While Chinese companies are able to design chips based on the advanced 7-nanometre process, the country’s top chip foundry – Semiconductor Manufacturing International Corp – can only produce 14-nm grade chips in scale. That has prompted some Chinese firms to rely on TSMC and Samsung for advanced chip production.
This article appeared in the South China Morning Post print edition as: Critics dismayed by TSMC response to US data request