China Capture of TSMC Would Be ‘Devastating’ For US: Raimondo

A Chinese invasion of Taiwan and the capture of world-leading chips producer TSMC would be a major blow for the American economy, US Commerce Secretary Gina Raimondo said.

Asked at a US House hearing about the possible impact, Raimondo said “it would be absolutely devastating,” declining to comment on how or if it will happen, adding: “Right now, the United States buys 92% of its leading edge chips from TSMC in Taiwan.”

Last month, Raimondo announced the Commerce Department would award TSMC’s US unit a $6.6 billion subsidy for its most advanced semiconductor production in Phoenix, Arizona, and up to $5 billion in low-cost government loans.

TSMC agreed to expand its planned investment by $25 billion to $65 billion and to add a third Arizona fab by 2030, the department said in announcing the preliminary award.

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The Taiwanese company will produce the world’s most advanced 2 nanometer technology at its second Arizona fab where it’s expected to begin production in 2028, the department said.

TSMC, the world’s largest contract chipmaker and a major supplier to Apple and Nvidia, had previously announced plans to invest $40 billion in Arizona.

TSMC expects to begin high-volume production in its first US fab there by the first half of 2025, Commerce said.

Congress in 2022 approved the Chips and Science Act to boost domestic semiconductor output with $52.7 billion in research and manufacturing subsidies to wean the United States from its reliance on Asia for chips.

Lawmakers also approved $75 billion in government loan authority.

A 2023 US government paper estimated a major manufacturing disruption in Taiwan could lead to as high as a 59% increase in the US price of logic chips that domestic downstream producers would have to pay.

Reuters with additional editing by Sean O’Meara

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.