As tensions between China and Taiwan continue to flare, TSMC and... the global economy are in real danger.
The world's leading semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company - TSMC - is at the heart of the tensions between "the two Chinas". Since 1949 and the end of the Chinese Civil War, there have been two states on either side of the Taiwan Strait. On the mainland, the Communist victors of the civil war, led by Mao Zedong, founded the People's Republic of China, while Chiang Kai-shek's republicans fled to the island of Taiwan to found the Republic of China. Neither country officially recognizes the other, and Xi Jiping's People's Republic of China considers that the island should be returned to its fold, " if necessary by force ". U.S. support for Taiwan has never wavered, but events have become all the more important as Taiwan has become a global electronics giant. Other major companies produce large quantities of computer hardware there, which is exported all over the world, but TSMC is the most emblematic case, as the company has become so vital to the global economy as a whole. TSMC produces over 50% of the world's semiconductors, making it by far the industry leader. This number one position is, however, weakened by its geographical position, as 80-90% of its production comes from factories located on the island of Taiwan. Threats of invasion by the People's Republic of China are therefore not taken lightly.
U.S. Department of Defense, French Ministry of Economy and Finance, BNP Paribas - Economic Studies
For several years now, under the presidency of Mark Liu, TSMC has been asserting its determination to deploy factories under its own name all over the world. In 2020, contracts were signed with the USA to build TSMC factories on American soil. However, this dynamic policy has been undermined by Mark Liu's successor, C.C. Wei. As soon as he took office at the end of May, he tried to calm things down: " The instability across the Taiwan Strait is indeed a factor to be taken into account for the supply chain, but I would like to say that we certainly don't want any wars to break out ". However, he was also quick to point out that moving TSMC's production sites off the island of Taiwan is " almost impossible ".
There are several reasons for C.C. Wei's "defeatism". TSMC's new factories in the USA have already created 6,000 specialized jobs, 20,000 construction jobs and tens of thousands of jobs for subcontractors, but they have not changed the distribution of TSMC's production, 80-90% of which comes out of Taiwanese factories. C.C. Wei believes that it will be difficult to go much further due to a lack of qualified manpower to support the transfer of factories. Some analysts also point out that corporate cultures and managerial habits are very different in Taiwan than in the United States or even Europe. Finally, another explanation for this difficult, if not impossible, move comes from AMD CEO Lisa Su: " We do a lot of our manufacturing here, with key suppliers like TSMC... And we also have a number of partners who help us build the ecosystem here in Taiwan. The ecosystem in place in Taiwan complicates matters considerably: TSMC's factories are not to be relocated on their own, a whole industrial fabric has to be built where they are to be relocated.
