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China Must Seize TSMC if US Imposes Sanctions: Top Economist

An economist at a government-affiliated research institute warned that top chipmaker TSMC is speeding up expansion to the US and may decamp from Taiwan.


The Taiwan government is open to its chip producers setting up factories in Europe and would welcome closer relations – and a free-trade deal – with the European Union.
TSMC is the world's largest contract chipmaker and Asia's most valuable listed company. The government in Taipei said it welcomed closer ties with "like-minded" democracies. File photo: Reuters.

 

A top China economist at a government-linked research institute has urged Beijing to seize Taiwan Semiconductor Manufacturing Company (TSMC) if the nation faces sanctions like those imposed on Russia, and warned that the world’s largest contract chipmaker may decamp to the US.

“When the US and the West impose destructive sanctions on China, like sanctions against Russia, we must recover Taiwan,” said Chen Wenling, chief economist at the China Center for International Economic Exchanges (CCIEE). “Especially in the reconstruction of the industrial supply chain, we must seize TSMC, a company that originally belonged to China.”

CCIEE is a research group overseen by the National Development and Reform Commission, China’s top economic planning agency. Chen’s speech was posted online  and was still visible until about 7am GMT Wednesday, but was subsequently removed. Chen spoke at an event hosted by the Chongyang Institute for Financial Studies at Renmin University.

TSMC is the world’s largest contract chipmaker and Asia’s most valuable listed company. It is spending $12 billion on the construction of chip factories in the US as well as building one in Japan with Sony and mulling another in Germany.

 

READ MORE: China War Risk Sees Taiwan’s TSMC Moving Fabs to US, Japan 

 

TSMC Out of China’s Grasp

Chen suggested the US expansion would lead to TSMC’s eventual shift out of Taiwan and thus out of China’s grasp.

“They are speeding up the transfer to the US, and to build six factories in the US, we must not let all the goals of the transfer be achieved,” she said.

TSMC has become a focus of US and Chinese strategists. In January, two US scholars argued in favour of a “scorched-earth” semiconductor strategy based on the idea of demonstrating to China that it would make no logical sense to seize Taiwan by force.

One key recommendation in the article, published by the US Army War College, is for the US and Taiwan to threaten to destroy TSMC facilities if Beijing invades.

 

Support Russia

Chen also urged China to ”do everything we can to support Russia” openly and reasonably, such as by extending the Belt and Road Initiative infrastructure. She also urged China to try to block and delay opponents’ actions to cut off supply chains and technological cooperation with China.

“There is no need to be afraid of what the United States says about us and what the West says about us,” she said. “They never take what we say seriously.”

Chen also urged China to cooperate with Europe. The Russian invasion of Ukraine “would hit the euro hard,” she argued. “In addition, there will be a food crisis, an energy crisis, and a refugee crisis in Europe.”

She said Beijing could take advantage of such a crisis. “China can lend a helping hand and increase cooperation between China and Europe, so that Asia and Europe can return to their historical political and economic centres,” she said.

 

 

  • George Russell

 

 

 

READ MORE:

TSMC Lukewarm on Europe, Stands By 30% Growth Forecast

Taiwan Exonerates Foreign Brokers over TSMC Reports

AF TV – China threat to TSMC: What worries the US

 

 

 

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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