Taiwanese chipmaker TSMC warned on Wednesday that rising tensions between Taiwan and China and the US have created significant tests for industry leaders.
Taiwan is a major producer of computer chips, with Taiwan Semiconductor Manufacturing Co (TSMC) the world’s largest contract chipmaker and Asia’s most valuable listed firm.
While the chips sector is bracing for waning demand as inflation squeezes spending and the global economy, Taiwan faces a tricky situation – wedged between its largest export market China and its main international backer and arms supplier, the United States – as Beijing ramps up military pressure to force Taipei to accept Chinese sovereignty.
Mark Liu, chairman of chip giant Taiwan Semiconductor (TSMC) spoke at the Taiwan Semiconductor Industry Association’s annual convention, saying: “The US-China trade conflict and the escalation of cross-Strait tensions have brought more serious challenges to all industries, including the semiconductor industry.”
In recent years, China’s government has “never stopped promoting its domestic semiconductor industry”, including chip design, manufacturing, and packaging, he added.
The United States has also passed its CHIPS Act to vigorously support local research and development and manufacturing, Liu said.
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Liu said he looked forward to Taiwan’s industry, government and academia developing “more concrete, constructive measures” on industrial policies related to innovation, research, talent education and retention “to maintain Taiwan’s most critical semiconductor industry advantages”.
He noted that this year the “industry value” of Taiwan’s chip sector is expected to have risen one-fifth compared with 2021, even with the impact of Sino-US trade friction and geopolitical problems.
While Liu did not make direct mention of it, the sweeping set of export controls announced by the United States this month, aimed at slowing China’s progress in advanced chip manufacturing, is expected to also impact Taiwanese chipmakers.
The new rules require US companies to cease supplying Chinese chipmakers with equipment to make relatively advanced chips, though Washington has granted some non-Chinese companies operating in China one-year licences.
TSMC, which makes most of its chips in Taiwan, last week cut its annual investment budget by at least 10% for 2022 and struck a more cautious note than usual on upcoming demand.
TSMC’s dominance in making some of the world’s most advanced chips for high-end customers such as Apple and Qualcomm has shielded it in recent quarters from the downturn flagged by chipmakers including Micron Technology.
- Reuters with additional editing by Jim Pollard
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