TSMC says US-China deleveraging could increase semiconductor costs

TSMC chairman says Taiwanese companies must improve technological capabilities in response to rising costs

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TSMC logo (Reuters photo)

TSMC logo (Reuters photo)

TAIPEI (Taiwan News) — As the U.S. and China seek to shift their supply chains amid ongoing trade tensions, the effects on the semiconductor industry could lead to increased costs and a restriction in the flow of ideas, according to the chairman of Taiwan Semiconductor Manufacturing Company (TSMC).

Speaking at Semicon Taiwan, a semiconductor conference, in Taipei on Wednesday, TSMC chairman Mark Liu (劉德音) pointed out that the semiconductor industry has benefited from the free flow of information over the last four decades, Reuters reported.

“But in the future, the climate may change. The information flow may not be that free. Tariffs may be erected. So we have to prepare for that,” Liu said. “One thing is the competition will be stronger. Secondly, the cost of production or development will be higher because one cannot leverage the whole world like in the past.”

“Because either side of the Pacific is trying to do their self-sufficient supply chains. They want to do it themselves,” Lu said, according to Reuters.

Washington has restricted access to supplies to Chinese tech companies like Huawei, citing national security concerns, and is attempting to have American factories relocate back to the U.S. from China. Meanwhile, Beijing wants to develop its own semiconductor industry that is less reliant on U.S. suppliers.

As a result, Liu said Taiwanese companies will have to improve their own technological capabilities and remind the world how important the country’s companies are.

Last May, the U.S. placed Huawei on its Entity List, to limit its use of American technologies, requiring U.S. suppliers to obtain government approval to ship to the Chinese telecoms company, while in May of this year, restrictions were broadened to include non-U.S. manufacturers from assembling any products for Huawei if they used American equipment. In August, Washington restricted all suppliers using U.S. technologies from doing business with Huawei without a license.

TSMC said in July that it had stopped taking new orders from Huawei back in May and would stop shipping chips to the Chinese company after Sept. 15 in response to the U.S. sanctions. TSMC also plans to build a US$12 billion foundry in Arizona.