Concerns arise over Taiwan’s ‘Silicon Shield’ amid TSMC move

TAIPEI (TVBS News) — Taiwan Semiconductor Manufacturing Company (TSMC, 台積電) announced a US$100 billion investment in the U.S. on March 3 (Monday), sparking mixed market reactions. TSMC's stock prices initially dropped by 2.25%, only to rebound by NT$20 the following day. The investment aims to expand TSMC's presence in Arizona with plans for three wafer fabs, two packaging plants, and an R&D center.

Concerns and Support

In Taiwan, concerns arise about potential local talent loss and the weakening of the "silicon shield." Analysts have varied opinions on TSMC's decision. Lee Yung-nien (李永年), a stock analyst, views the investment as a strategic move to avoid tariffs or technology transfers to Intel. Daniel Tsai (蔡明忠), chairman of Fubon Financial Holding Co., supports the decision, emphasizing its protective nature for Taiwan's ICT industry.

Tsai highlighted TSMC's global significance, dismissing skepticism as unfounded. Recent reports suggest President Lai Ching-te (賴清德) met with TSMC leadership, including Morris Chang (張忠謀) and C.C. Wei (魏哲家), before the announcement, indicating potential benefits outweigh downsides. Tsai warned that stifling Taiwan's industry could hinder global AI development.

Strategic Implications
Analysts suggest that while moving from supply chain to ecosystem services benefits the industry, concerns remain. Yang Guang-lei (楊光磊), a former TSMC R&D director, cautions against over-reliance on the U.S., especially if TSMC shifts 20% of capacity overseas. In Arizona, TSMC plans to introduce a 4-nanometer process, with 2-nanometer and 3-nanometer production by 2028, but faces challenges like talent training.

Nobunaga Chai (柴煥欣), vice president of the "Cloud Express" Institute, warns that synchronizing U.S. and Taiwan process technologies could undermine Taiwan’s edge. Tai Chih-yen (戴志言) from the Chung-Hua Institution for Economic Research believes Taiwan must continue next-gen tech R&D to redefine its “Silicon Shield.” Despite concerns, many in the industry argue that "know-how" is not easily transferable and the U.S. lacks sufficient vendor support.

This expansion represents the largest single foreign direct investment in U.S. history, totaling US$165 billion. While Taiwan holds 70% of global advanced manufacturing capacity, experts forecast the U.S. share will reach 17% by 2027 with TSMC's involvement. As TSMC navigates geopolitical pressures, the semiconductor industry will closely watch these developments' impact on Taiwan's technological edge and global market dynamics.