Recently, in a news program, U.S. Treasury Secretary Janet Yellen once again mentioned Taiwan regarding the chip issue, claiming that Taiwan almost monopolizes high-end chip production, which poses risk management problems. The U.S. must transfer part of its production to other countries to reduce risks, raising concerns from various sectors. There are worries within Taiwan that if the Democratic Progressive Party (DPP) government allows the U.S. to dictate terms, Taiwan’s core competitiveness will be further diminished.
Data image. Source: United Daily NewsReiterating Taiwan’s RisksAccording to Taiwanese media reports, Yellen stated in an interview that the biggest single risk facing the global economy is that the vast majority of high-end chips are produced in Taiwan. Given that Taiwan almost completely dominates the semiconductor production market, the U.S. is making every effort to ensure that it and its allies can secure the safety of the semiconductor supply chain.She said that Taiwan is doing very well in this regard, possessing an excellent industrial ecosystem; however, in terms of risk management, the U.S. must at least transfer 30%, 40%, or even 50% of its production capacity to the U.S. or allied countries, whether in Japan or the Middle East, “We are working hard on this every day.”This is not the first time Yellen has mentioned the need to “de-risk” high-end chip production in Taiwan. At the end of August this year, she pointed out in an interview that Taiwan’s monopoly on high-end chip production poses a serious national security crisis for the U.S., and that the U.S. must relocate Taiwan’s chip production to ensure its economic security.Allowing the U.S. to Dictate TermsIn response to the U.S. Treasury Secretary’s remarks, Taiwan’s Minister of Economic Affairs Wang Mei-hua clarified on September 25 that the stronger Taiwan’s industrial effectiveness and strength, the greater its contribution to the integrity of the global supply chain, “The strength of Taiwan’s industry is definitely not a risk.”She also stated that Lai Ching-te has clearly defined the industrial policy as “rooted in Taiwan, laid out globally, and marketed worldwide,” and the Ministry of Economic Affairs will adhere to these principles in its operations.However, this response seems insufficient to dispel public concerns about the safety of Taiwan’s chip industry. Many netizens commented under related reports, stating, “Yellen’s remarks, cloaked in national security and risk diversification, essentially aim to move critical capacity and technology out of Asia,” and “The U.S. is draining Taiwan.”For some time, in the face of U.S. economic bullying, various sectors in Taiwan have questioned whether the DPP government can provide substantial countermeasures or if it will continue to compromise and retreat.Under the pressure of U.S. tariffs, TSMC announced in March that it would invest an additional $100 billion in the U.S., involving the construction of chip factories, packaging plants, and R&D centers. Reports indicate that this is the largest single foreign direct investment in U.S. history. Combined with TSMC’s earlier investment of $65 billion in Arizona, the company’s total investment in the U.S. will reach $165 billion.As production capacity shifts, technology is also flowing out. In addition to the aforementioned establishment of R&D centers, in April this year, media reported that TSMC and Intel had reached a preliminary agreement to establish a joint venture to operate Intel’s chip manufacturing plant in the U.S.; Taiwan’s United Microelectronics Corporation is also evaluating a merger with U.S. GlobalFoundries to establish a U.S. company, with the ultimate goal of replacing TSMC.
Data image. Source: CCTV News ClientTaiwan’s Competitive Advantage May Accelerate ErosionFrom an external perspective, after increasing its investment in the U.S., TSMC is expected to trigger a new wave of semiconductor industry supply chain relocations to the U.S. The Taiwanese industry will continue to be shrouded in concerns about industrial and technological outflows.In early August this year, the U.S. announced a 100% tariff on imported semiconductor companies, but those that meet the three principles of “already established factories in the U.S.”, “currently building factories”, or “have clear investment commitments” can be exempt from tariffs. A few days later, the U.S. reversed its stance, stating that it might raise semiconductor tariffs from 100% to 300%.Some analysts suggest that this move aims to force the chip industry to invest in the U.S. Taiwanese scholars have warned that the mid-to-lower reaches of Taiwan’s semiconductor industry chain will be forced to reorganize. If TSMC relocates, Taiwan’s economic lifeline may face hollowing out.Industry insiders in Taiwan are concerned that as the chip industry chain and technical personnel move to the U.S., Taiwan’s local competitive advantage may accelerate its erosion.“TSMC has long become the DPP government’s ‘reliance on the U.S. to seek independence’ badge.” A spokesperson for the Taiwan Affairs Office pointed out that if the DPP government is allowed to continue down the path of ‘selling out Taiwan’ and ‘destroying Taiwan’, the Taiwanese industry and the public will lose not only their current jobs but also future development opportunities.
Author: Nan Xing
Editor: Liang Jing
Proofreader: Wei Yuan
Editor-in-Chief: Song Fangcan
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