Growing rivalry with China: Taiwan’s chip-making giant to invest $40b in US

In one of the largest foreign investments in the American history with a great strategic significance, the computer chip giant TSMC will invest $40 billion in the US.

The move means TSMC (Taiwan Semiconductor Manufacturing Company) – world’s largest maker of microchips for other companies including Apple – is going to triple its investment in a giant plant at Phoenix, Arizona. It was inaugurated by President Joe Biden and TSMC Chairman Mark Liu on Tuesday.

Experts see TSMC’s investment as a potential game changer in the industry and a significant step for US chip investment over the next decade. It kicks off a legitimate battle between the US and China on chip production amid a monumental strategic move by TSMC.

Its Arizona plants will produce 3-nm and 4-nm chips used for iPhone processors. Semiconductors are sometimes referred to as the “brains” of electronics like smartphones, car components and AI technology.

According to Liu, the firm will build two semiconductor fabrication plants with the first one expected to be online by 2024 in the largest investment the company has made outside of Taiwan.

The investment is a boost for Biden following supply chain disruption that has led to chip shortages and amid growing tensions between the US and China.

He signed a law in August committing $280 billion to high tech manufacturing and scientific research amid fears that the US is losing its technological edge to China. The investments include tax breaks for companies that build computer chip manufacturing plants in the US.

The move came at a time when the US-China relations have soured fuelled by Beijing’s claims over self-ruled Taiwan and its increasing assertiveness in Asia. Beijing sees Taiwan as a part of its territory that must be unified with the mainland, by force if necessary. Taiwan sees itself as distinct from the mainland.

The US has responded by restricting access to advanced computer chip technology which has hit China’s export-driven economy using the technology to make and sell everything from phones to electric cars.

Actually, the original deal for TSMC to build a plant in the US came in 2020 when President Donald Trump was in office. The latest announcement vastly increases the size of that investment.

“Today, we’re down to producing only around 10 percent of the world’s chips, despite leading the world in research and design in new chip technologies,” said Biden during his speech.

The US once made more than 30% of the world’s computer chips before the jobs moved overseas, he said. “The United States is better positioned than any other nation to lead the world economy in the years ahead if we keep our focus.”

Apple goes for Made in US

Speaking on the occasion, Apple CEO Tim Cook said they would buy US-made microchips. “And now, thanks to the hard work of so many people, these chips can be proudly stamped Made in America,” Cook said. “This is an incredibly significant moment.”

“Today is only the beginning,” he said. “Today we’re combining TSMC’s expertise with the unrivaled ingenuity of American workers. We are investing in a stronger brighter future, we are planting our seed in the Arizona desert. And at Apple, we are proud to help nurture its growth.”

Later, Cook in a tweet said that Apple would be the “site’s largest customer”.

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