TSMC Founder Warns About End of Free Trade in Semiconductors

October 28, 2024 TruthUSA

TSMC is a key chip supplier for Apple and recorded $23.5 billion in revenues in the third quarter.

Taiwan Semiconductor Manufacturing Co.’s (TSMC’s) founder Morris Chang said on Saturday that semiconductor free trade has “died” in the face of rising geopolitical tensions, posing severe challenges to the company.

While speaking at a TSMC sports event, Chang reflected on the company’s prediction from five years ago that it could potentially become a “battleground” for geopolitical strategists as a result of its success.

“TSMC is now truly a turf all major powers want to secure,” he said during the company’s annual athletics day in Hsinchu, Taiwan.

TSMC, the world’s biggest chipmaker, has expanded its global production footprint to the United States, Germany, and Japan. The Taiwan-based company is a key chip supplier for Apple and Nvidia and recorded $23.5 billion in revenues in the third quarter ended in September.

Chang warned that the end of free trade in semiconductors amid the geopolitical tensions surrounding Taiwan, the self-ruling island that China claims as its own, could pose challenges to TSMC’s development.

“Free trade of semiconductors, particularly the most advanced semiconductors, has died. In such an environment, our challenge lies in how to continue to drive growth,” he stated.

In 2022, the United States imposed sweeping export controls on chipmaking equipment to China, aiming to contain the Chinese regime’s ambition to bolster its military with cutting-edge technology.

Chang said last year that he supports Washington’s efforts to slow down China’s progress in the semiconductor industry but criticized the United States’ “friend-shoring” of high-technology manufacturing for excluding Taiwan as one of the friend-shoring destinations.

U.S. Commerce Secretary Gina Raimondo has said the U.S. dependence on Taiwan for chips is “untenable and unsafe,” referring to the Chips and Science Act intended to increase the manufacturing of U.S.-made semiconductors.

The Biden administration announced on Apr. 8 that it will provide TSMC with up to $6.6 billion in direct funding under the Chips and Science Act to build three factories in Phoenix. The deal also included a $5 billion proposed loan to TSMC.

During his interview on the Joe Rogan Experience podcast on Oct. 26, Republican presidential nominee and former President Donald Trump criticized the Chips Act and said the United States should impose tariffs on the companies.

“When I see us paying a lot of money to have people build chips, that’s not the way. You don’t have to put up 10 cents, you could have done it with a series of tariffs … it’s so high that they will come and build their chip companies for nothing,” Trump said.

“We didn’t have to give them the money to build the plant. Besides, they’re very rich companies, these chip companies. They stole 95 percent of our [chip] businesses, it’s in Taiwan right now.”

TSMC Chip Found in Huawei Product

TSMC said last week that it had informed the United States that one of its chips was reportedly found in a product produced by the Chinese company Huawei Technologies Co.

This came after tech research company TechInsights, which took apart Huawei’s Ascend 910B, alerted TSMC about the finding.

The company affirmed its commitment to complying with all regulatory requirements and emphasized that it “has not supplied to Huawei since mid-September 2020,” according to a Reuters report published by Taiwan’s Overseas Community Affairs Council.

“We proactively communicated with the U.S. Commerce Department regarding the matter in the report. We are not aware of TSMC being the subject of any investigation at this time,” the company said in a statement.

The United States placed Huawei on a trade restriction list in 2019 over national security concerns. The Commerce Department said it was aware of the reports but could not comment on whether any investigation was underway.

The Epoch Times contacted Huawei for comment but received no reply by publication time.

Rep. John Moolenaar (R-Mich.), chairman of the U.S. House Select Committee on the Chinese Communist Party, has demanded answers from both the Commerce Department and TSMC following the reports.

“Reports that cutting-edge TSMC-manufactured chips have contributed to Huawei’s AI development represent a catastrophic failure of U.S. export control policy,” Moolenaar said in a statement.

“AI accelerators, like the one that these chips fueled, are at the forefront of our technology race with the CCP [Chinese Communist Party], and I fear the damage done here will have significant consequences for our national security.”

Mary Hong and Reuters contributed to this report.

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