Taiwan’s Semiconductor Giant Affirms Its Commitment to the Island Despite Regional Uncertainty
TAIPEI: Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, confirmed on Tuesday (Jun 4) that while it has held discussions with some customers about relocating its chip plants amid rising tensions with China, such a move is simply unfeasible.
The tensions have escalated since Beijing launched military exercises near Taiwan following the inauguration of President Lai Ching-te, whom Beijing considers a “separatist.” These developments have raised concerns about the future stability of the Taiwan Strait, which is crucial to global supply chains, especially for high-end semiconductors.
“Instability across the Taiwan Straits is indeed a consideration for supply chains, but I want to say that we certainly do not want wars to happen,” said CC Wei, Chairman of TSMC, during a press conference following the company’s annual general meeting. He emphasized that relocating TSMC’s operations is impossible, as 80 to 90 percent of its production capacity is based in Taiwan.
Although TSMC engaged in talks with certain clients about potentially moving operations off the island, Wei did not specify which customers were involved in these discussions. The company has been under pressure from increasing demand, particularly from industries such as artificial intelligence, where companies like Nvidia and OpenAI require specialized chips for their applications.
TSMC, which has been handling surging orders for chips used in generative AI tools, also discussed AI chip supplies with OpenAI. However, Wei expressed concerns about the “aggressive” nature of OpenAI’s requests, noting that the volume of demands was “too aggressive” for TSMC to meet.
OpenAI’s CEO, Sam Altman, had previously engaged in discussions with TSMC about a partnership to build multiple factories to meet the growing demand for AI chips. However, TSMC felt the proposal for 30-plus factories was excessive and feared the company wouldn’t be able to maintain the necessary operational capacity at over 80% for the new fabs. While TSMC did not specify whether discussions included building fabs outside Taiwan, the potential for such a move remains unlikely.
Despite the heightened tensions with China, many in Taiwan’s semiconductor industry remain confident. Frank Huang, Chairman of Powerchip Semiconductor Manufacturing, reassured the public at the Computex technology trade show in Taipei, stating, “Nobody is worried about this yet.” He acknowledged military activity but stressed the vital role Taiwan plays in the AI sector, which even China recognizes.
Lisa Su, CEO of Advanced Micro Devices (AMD), also reiterated Taiwan’s critical role in the global chip ecosystem, saying that the presence of key suppliers like TSMC is indispensable for the tech industry. “The bottom line from our perspective is it’s really important to have a global ecosystem,” she said.
Despite the ongoing geopolitical tensions, the resilience of Taiwan’s semiconductor industry remains a key pillar for both regional and global technological advancements.
