Is America Stealing TSMC?

6:00 - Note. I do know the Japan fab will be a joint venture. However, TSMC management noted that is because it is producing a specialty technology.

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[aa-qxcg]

I've spoken to some Taiwanese people about this. They believe that after TSMC is secure in the US, the island of Taiwan will be gradually abandoned by the US defense and just left to China. It's not an unreasonable fear.

[campbellmorrison]

Totally agree, packaging is often overlooked and its really clever stuff

[FacultyFan]

This kind of cracks me up. "The US is stealing TSMC..." Well actually, it's a fab running Dutch Lithography machines supplied by US technology. this technology originated in the US, we just had greedy ass businessmen here who didn't want to invest in Chip fabs and just wanted to design the chips that are shipped off shore where cheap labor can produce them cheaply. The US is more than capable of producing these chips, it's just we aren't capable of producing them cheaply.

[OperationXX]

As someone working in the industry, I am hearing a lot of companies planning to diversify or already working on diversifying their portfolio to include Samsung or Intel to reduce risk to their business due to geopolitical issues. Volume is king in the leading edge semiconductor competition so if TSMC loses significant wafer volume to its competitors, it could lose its lead as well (in fact, that's the main reason Intel lost its lead). TSMC should do whatever it takes to keep its wafer volume ... hopefully this is just a bump in the road that'll come to pass.

[DanielSMatthews]

A quick look at who owns the most shares in TSMC makes the idea of the USA "stealing" TSMC seem rather naive.

[a]

TSMC is not the only company to be concerned about terms and conditions imposed by the U.S. government on companies that apply for CHIPS and Science subsidies. South Korean chipmakers are also unhappy with these requirements and believe that they could lose more than they get.

[NorthernWindNut]

Building an extremely high water consumption facility in Arizona seems hare brained to me. Yeah, I know they claim they can stretch out the limited water with reclamation processes, but there is already explosive growth in the Phoenix area not expected to slow anytime soon, and the western States have been plagued with droughts in recent years. Somehow they’ve kept Phoenix going all these years, though, so who knows.

[bill]

Absolutely appreciate your broad perspective and analysis. Thanks to you for your great videos.

[chihhou]

I think the concern is TSMC is not acting based on market needs but geopolitical pressure. This opens possibility that US can force TSMC to surrender its technology advantage to US.

[dcviper]

Thanks for this perspective. I didn’t realize that Taiwanese people thought that we were stealing tsmc tech.

[christphr]

As a Taiwanese grad student in SoCal studying this issue (I am more interested in the politics of this), I appreciate that you made this (and other) great video(s)! It is a true concern for plenty of Taiwanese, but I think that the concern is more on the political implication rather than the "real" impact on the industry and that the "semiconductor shield" might be less monumental once TSMC is moving some of the production out of Taiwan. As you said, this shift from TSMC is not critical to the Taiwanese semiconductor industry or the competitive edge of TSMC, and I would also argue that this shift might also strengthen the leverage of Taiwan in international politics once it leaves a positive impact on the US industry and other businesses.

[ceb]

The problem here is that mainland China could stop the production of TSMC chips in Taiwan with just a handful of missiles, so the US needs at least a backup local source. I don't expect Taiwan to lose its primary source role in the foreseeable future.

[benjaminlynch]

This is a great video and deeper than I expected.

One thing the last few years has taught us all is that modern supply chains are very fragile. Whether it’s a war, pandemic, port issues, or tariffs, having single points of failure in your supply chain is not good business. This is why Apple is wants some (not all) of its manufacturing in the United States and will want some in Europe as well.

The other interesting thing I thought of with the Arizona fab specifically is that it’s just down the street from the new Intel fab that they sold off to their JV (with private equity contributing 49% of the cost). It doesn’t get discussed much, but Intel is also one of TSMC’s larger customers and has been for a long time. While there’s no direct evidence to suggest that TSMC’s facility will be supporting Intel’s operations, it makes a tremendous amount of sense in terms of logistics that Intel’s orders will be fabbed in Arizona once operational. This could just be a coincidence of course, but I’m not one to believe in coincidences that require an 11-figure investment. But that’s just me.

Lastly, in terms of national security issues, expanding to Arizona makes a lot of business sense for TSMC. Sensitive government customers (CIA, NSA, military, etc) want their stuff manufactured domestically to make it more difficult for foreign governments to interfere or sabotage production. That Bloomberg story a few years ago may have been fabricated, but that doesn’t mean the concern in the government isn’t real. A lot of those orders have gone to Intel for that very reason, and TSMC opening up a facility in Arizona - in theory - means that they’ll be able to bid on those contracts going forward.

[timkaine]

I think everyone is spooked by the idea of a global supply chain being dependent on a single place, it introduces massive global systemic risk if war should break out in the area. Ukraine's war caused massive shock the global chemical market. The unfortunate reality is that the economy is now going to bifurcate significantly in the face of this risk and possibly become way less efficient

[markw]

Just a few items to keep in mind; The Integrated Circuit was invented by Jack Kilby @ Texas Instruments in 1958. He was awarded the patent. Jack Kilby used germanium as the substrate, Robert Noyce at Shockley Semiconductor used silicon, which is the basis for almost all IC’s now. For a number of years ALL IC’s were manufactured in the USA, mostly each company or a partner in the USA. Texas Instruments had their own manufacturing and produced all of their products. Noyce, Shockley and Gordon Moore founded Intel in 1968. Intel invented the first microprocessor. Morris Chang, founder of TSMC worked at Texas Instruments for 25 years and was recruited by the Taiwanese government to develop IC manufacturing domestically. He convinced American companies to go “fabless” in order to reduce their costs. Obviously that worked. The other side of the story is that having only one location or source of manufacturing puts companies at risk. The push for global manufacturing is happening and would have happened almost regardless of other issues. At best TMSC will have to build factories in multiple continents, countries and regions. Most likely other companies will build facilities to build semiconductors and IC’s. Monopolies usually cause their own problems by restricting availability of supply.

[sadnanoengineer]

Thank you for (in my opinion) an unbiased analysis as always. As a student in the semiconductor field, it nice to have a very objective outlet for this kind of news. Without your concise videos, I would likely not have taken the effort to scrounge for news across different sources to piece together a picture for myself.

[bpurkapi]

The key driver is taiwanese people who are extremely dedicated to the company. I lived in Taiwan for a short time and can say that the labor realities are very different from the United States. Taiwanese engineers are highly skilled and extremely engaged with their work, yet work longer and have less quality of life than Americans. It will be interesting to see TSMC adjust to American culture in Arizona.

[peterlaval]

One correction is that the US is not just interested of the 5nm, also the 4nm and 3nm. These are the core of the TSMC in present time. As is said, these development is based years of hard working cumulation. No one in the right mind would be willing to export them without the reason. From what I can see. It's NOT STEALING. Because stealing would imply that the Taiwanese does not know about the transfer. So, if it's not stealing, nor voluntaries. It has to be gun "ROBBERY". That is the only way to describe this type of arrangement.

[danharold]

"In January 1955, the U.S. Congress passed the “Formosa Resolution, ” which gave President Eisenhower total authority to defend Taiwan and the off-shore islands."
In other words the US was defending Taiwan long before there was a TSMC.

[aosborne]

You have a delightful way of explaining things. I have deeply enjoyed your videos and learned a ton from them. Bravo! Wonderful work! And thank you.