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Trust key to success for Taiwan's TSMC: American economist

Economist says TSMC’s ecosystem puts it far ahead of China’s tech players

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The logo of Taiwan Semiconductor Manufacturing Co. (TSMC) at its headquarters in Hsinchu, Taiwan, on January 19, 2021. (Reuters photo)

The logo of Taiwan Semiconductor Manufacturing Co. (TSMC) at its headquarters in Hsinchu, Taiwan, on January 19, 2021. (Reuters photo)

TAIPEI (Taiwan News) — Columnist and author Thomas L. Friedman published an opinion article in the New York Times claiming the success of Taiwan Semiconductor Manufacturing Corporation (TSMC) rests on trust.

The article begins by outlining how Chinese leader Xi Jinping’s (習近平) authoritarian turn has eroded trust in China’s tech sector before going on to explain how maintaining trusted partners around the globe has kept TSMC and Taiwan’s broader tech industry at the forefront of innovation and vital to the world economy.

“I recently spent time in Silicon Valley asking U.S. chip designers what is the secret of TSMC’s sauce that China cannot replicate,” he writes. “Their short answer: trust.”

Friedman says the semiconductor industry is so complex that it is nearly impossible for one actor in the system to have the best in every category. To succeed, he posits, you need to cooperate with many trusted partners, just like TSMC does.

He points out that for TSMC to make chips to specification for so many companies like Apple, Qualcomm, Nvidia, AMD, and Intel, those companies need to disclose the designs of their tech to TSMC, which requires a deep sense of trust. “TSMC has built an amazing ecosystem of trusted partners that share their intellectual property with TSMC to build their proprietary chips,” he says.

In this regard, China’s tech industry could not be further apart from Taiwan’s. Friedman admits he used to worry about Xi’s “Made in China 2025,” — Beijing’s master plan to dominate all the new 21st-century technologies — but that he is not so worried anymore.

Xi’s recent actions, Friedman says, have only driven potential trusted partners further away. He connects this with IP theft too, adding that Chinese companies are forced to mimic other industry players because they lack the trust to build mutually-beneficial partnerships where both sides learn from one another.

He says China cannot simply use force to solve the issue either. “If China thinks it can get around that by seizing Taiwan just to get hold of TSMC, that would be a fool’s errand,” he says, pointing out many key components for chip making come from the U.S and the EU and that the supply of these materials would be cut off if China were to take Taiwan by force.