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KMT accuses Taiwan government of 'giving away' TSMC to US

KMT lawmakers claim Tsai administration is 'ruining' TSMC, draining talent

Sign in the background reads "KMT cultivated TSMC! DPP gave away TSMC?" (Facebook, KMT caucus screenshot)

Sign in the background reads "KMT cultivated TSMC! DPP gave away TSMC?" (Facebook, KMT caucus screenshot)

TAIPEI (Taiwan News) — Kuomintang (KMT) caucus members on Monday (Dec. 28) accused the Tsai administration of "giving away" Taiwan Semiconductor Manufacturing Co (TSMC) to the U.S. with the new plant in Arizona, and claimed that it will "ruin" the company and lead to the poaching of its talent by its American rivals.

At a press conference held by the KMT caucus, its members claimed that past KMT administrations had worked hard to cultivate TSMC, but that the current government headed by the Democratic Progressive Party (DPP) has "given away TSMC to the U.S." They expressed concerns that the establishment of the Arizona facility will lead to the transfer of core technologies, lure Taiwanese talent to U.S. firms, and "destroy TSMC and Taiwan."

KMT caucus convener Tseng Ming-chung (曾銘宗) said that TSMC was established on February 21, 1976, and began to be "cultivated" during the KMT ruling period. What Tseng did not mention was that Taiwan during that period was under martial law at the time and subject to one-party rule.

Tseng said that TSMC now serves as a "silicon shield" to protect the country from invasion. The KMT lawmaker claimed that members of the semiconductor industry in Taiwan believe that by having a plant in the U.S., Intel will obtain technology to match TSMC's semiconductor yield rate.

In terms of talent loss, Tseng said that salaries for engineers at Intel are three to five times those of TSMC. Therefore, he claimed that when skilled engineers are sent to Arizona they will jump ship for Intel.

Tseng claimed that while the KMT "cultivated" TSMC in years past, the Tsai administration is "giving TSMC away." He called on the Tsai administration to support TSMC and come up with specific plans to "hold on to TSMC and to protect the country's silicon shield."

Caucus member Alex Fai (費鴻泰) said that Taiwan's annual GDP is about US$800 billion and the output of Taiwan's semiconductor industry accounts for 20% of Taiwan's GDP, with semiconductor exports accounting for more than one-third of the total. Fai noted that TSMC recently announced that it will increase its investment at the Arizona facility to US$40 billion and invest in the production of 4nm and 3nm chips, with production starting in 2024 and 2026 respectively.

Fai said that at present, 1,000 engineers have gone to the U.S. factory, and it is expected that 2,000 engineers will go there by the end of next year. After TSMC invests in 3nm chips in the U.S. factory by 2026, Fai claimed that the venture is bound to poach from other semiconductor industries in Taiwan.

Fai alleged that over the past two years, the U.S. has forced the Tsai administration to "offer TSMC with both hands" under the guise of preventing cutting-edge technology from "falling into the hands of the CCP." He claimed that instead TSMC is being converted into USSMC (US Semiconductor Manufacturing Co) and that Taiwan's "silicon shield" has been cut in half.

He said that in the end TSMC may be "wiped out," and feared that there would be a large brain drain and loss of job opportunities from TSMC, and then asked that after this happens, "what will Taiwan have left?"

It should be noted that TSMC's investment in the Arizona facility is fully owned by the Taiwanese company and is not a joint venture with an American firm. Therefore, it is not obligated to transfer any of its proprietary technology to U.S. companies.

In addition, TSMC is retaining the majority of its advanced semiconductor production capacity in Taiwan. When the 3nm plant goes online in the U.S. in 2026, TSMC's Fab 18 in Tainan, which has a much larger capacity than the Phoenix plant will have, will have already been making 3nm chips for four years and in 2025 will have started 2nm production in Hsinchu, where it also plans to launch a 1nm line.

The Financial Times in October released a report saying that at a lunch during U.S. House Speaker Nancy Pelosi's visit to Taiwan in August, TSMC founder Morris Chang (張忠謀) said in "stark terms" that U.S. efforts to reconstitute its domestic semiconductor production are "doomed to fail." 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 U.S. domestic chip-making to succeed.