Taiwan’s TSMC, the world’s largest contract chipmaker, has started manufacturing cutting-edge 4 nanometre (4nm) semiconductors in the United States, according to US Commerce Secretary Gina Raimondo.
The development comes at a time when Washington is pushing to boost chipmaking at home, and while TSMC is looking to diversify its operations due to increasing military threats against Taiwan from China.
“For the first time ever in our country’s history, we are making leading edge four-nanometre chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo told Reuters in an interview.
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Raimondo said production had begun in recent weeks at TSMC’s fab in Arizona.
“That’s a big deal — never been done before, never in our history. And lots of people said it couldn’t happen,” Raimondo said of the previously undisclosed production start.
The ability to make chips at home has been a key goal of outgoing US President Joe Biden’s administration, especially amid a heated technology war with China.
No leading edge chips are currently produced in the United States. But Raimondo wants the United States to make 20% of world’s leading-edge logic chips by 2030.
Meanwhile, Raimondo’s Commerce department has also been driving key US policies aimed at cutting off China’s access to cutting-edge chips and chipmaking technologies.
Industry experts say US sanctions have pushed China 10-15 years behind the West in chipmaking.
China says ‘supply chain at risk’
Responding to Raimondo’s statements, Chinese state-sponsored newspaper Global Times said on Sunday the development could lead to “overwhelmingly unfavourable consequences.”
The newspaper cited an older editorial to say the US was “using tricky ways to force the enterprise of our Taiwan region… to move to the US.”
Beijing claims democratically-ruled Taiwan as its own territory. It has not ruled out using force to gain control of the island. Those threats have been central to the US push to secure its chip supply chain and, also motivated TSMC to diversify operations outside the island.
Global Times also claimed that a shift from “the highly efficient ecosystems of Asia” to the US, where chip production remains costlier due to “high labour costs and a fragmented supply chain” — could drive global chip prices higher.
“This move is far from a natural market evolution. It has the potential to disrupt the global supply chain, which has been carefully shaped by market dynamics,” the Beijing mouthpiece said.
“America’s self-serving desire to bolster its domestic chip industry… comes at the cost of the Taiwan island’s semiconductor sector and the broader global supply chain,” it added.
Taiwan’s Trump card
Concerns around TSMC shifting production outside of the island have also been raised in Taiwan, where the chipmaker is viewed as the “sacred mountain protecting the country”.
TSMC plays a critical role in Taiwan’s export-dependent economy, especially since it faces little competition.
And yet, expanding production in the US could turn out to be critical for TSMC at a time when President-elect Donald Trump returns to the White House next week.
Trump has accused Taiwan of stealing American chip business and also said the island needs to pay the US for its defence.
The incoming US president has also been a sharp critic of the Biden Administration’s CHIPS Act, under which Commerce finalised a $6.6 billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona.
The TSMC award from Commerce also includes up to $5 billion in low-cost government loans.
Producing advanced chips in the US, could give Taiwan — and TSMC — leeway for a more favourable stance from Trump once he takes over as president.
TSMC will produce the world’s most advanced two-nanometre technology at its second Arizona fab expected to begin production in 2028.
TSMC also agreed to use its most advanced chip manufacturing technology called “A16” in Arizona.
- Vishakha Saxena, with Reuters
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