TAIPEI (Taiwan News) — Taiwan Semiconductor Manufacturing Company (TSMC) stock dropped by nearly 4% on Monday (Oct. 24) after a report revealed the firm's founder had told U.S. House Speaker Nancy Pelosi that American efforts to rebuild its chip manufacturing base will end in failure.
During Pelosi's visit to Taiwan in August, she attended a lunch with Taiwanese chip industry officials that included TSMC founder Morris Chang (張忠謀). On Monday, the Financial Times released a report saying that during the lunch Chang told Pelosi in "stark terms" that U.S. efforts to reconstitute its domestic semiconductor production are "doomed to fail."
One source familiar with the matter told the newspaper that Morris was "pretty blunt' and that the guests present were "a bit surprised."
Taiwan currently accounts for 20% of global semiconductor capacity, the most of any country, and produces 92% of the most advanced chips. Meanwhile, the U.S. share of worldwide chip production has plummeted from 37% in 1990 to 12% in 2020.
Experts interviewed by the newspaper pointed out the U.S. will indeed face many daunting challenges in trying to reshore chip production. Paul Triolo, a China and technology expert at Albright Stonebridge Group, said that American dependence on Taiwan-made advanced chips from TSMC will not abate until "TSMC, Samsung and Intel all site advanced facilities at scale in the US."
Even if the U.S. is able to ramp up the production of advanced chips, major sectors such as the auto industry and defense contractors will still be reliant on foreign manufacturers as they often use less advanced chips. Dick Thurston, former general counsel for TSMC and consultant, warned that "several multiples of the money committed over a period of 10 to 15 years" will be needed for domestic chip making to succeed.
Investors became spooked by the article, with TSMC's value on the New York Stock Exchange dropping up by as much as 6% in regular trading before closing down at 3.9% at US$61.29.