Thursday, April 3, 2025

US Tech Giants Face Potential Crisis if China Takes Over Taiwan’s TSMC

Reuters-News1

U.S. Commerce Secretary Gina Raimondo warned of significant damage to the U.S. economy if China invades Taiwan. She expressed particular concern about potential harm to U.S. businesses if Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry, were to fall into the hands of China.

 According to Singaporean media Channel News Asia (CNA), Raimondo attended a budget review of the Department of Commerce conducted by the House Committee on Appropriations on the 8th (local time). When asked about the potential damage if China invaded Taiwan and took over TSMC, she responded, “It would certainly be devastating.” Raimondo did not provide an exact extent of the potential damage, but explained that “the U.S. is currently purchasing 92% of its advanced semiconductors from TSMC in Taiwan.”

TSMC, the world’s largest foundry, manufactures semiconductors on a consignment basis for major information technology (IT) companies such as Apple and Nvidia. Last year, the U.S. government analyzed in a report that if there are disruptions in semiconductor production in Taiwan, the price of system semiconductors in the U.S. would increase by up to 59%. Unlike memory semiconductors that store information, system semiconductors are non-memory semiconductors that interpret and calculate data like central processing units (CPUs) and are usually produced by companies like TSMC and Samsung in Korea.

 After the outbreak of COVID-19, the U.S. government has been offering various benefits for foreign semiconductor companies to build factories in the U.S. to ensure a stable supply of semiconductors. TSMC announced earlier that it plans to invest $65 billion in Arizona to manufacture cutting-edge semiconductors with 1~4nm (nanometer) processes. In response, the U.S. government has decided to provide TSMC with $6.6 billion in subsidies and up to $5 billion in government loans.

Meanwhile, Raimondo announced in her congressional remarks that she intends to complete investment regulations to counter China by the end of the year. She emphasized, “We must overpower (China) in our competition,” and “We are taking all necessary measures to prevent China from obtaining cutting-edge technology.”

She explained, “What we continue to monitor are dual-use technologies that can be used for both commercial and military purposes,” and “It’s not easy to identify the commercial technologies of U.S. companies that China does not yet possess and is trying to access for military technology development.” In a separate interview, Raimondo stated that they would review all data, saying, “We could take drastic measures like prohibition of Chinese connected vehicles or mitigating measures.”

However, in her remarks to the House, Raimondo clarified, “We are not trying to cut off all trade with China. We are not trying to stop all technology trade with China,” and emphasized, “We will continue all types of exports to China including semiconductors, which is beneficial for the U.S. economy.”

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