The U.S. Would Destroy TSMC’s Facilities If China Invades Taiwan
Former National Security Advisor for the Trump administration, Robert O’Brien, has hinted that the U.S. would physically destroy the facilities of Taiwan Semiconductor Manufacturing Company (TSMC) if China attempts to invade Taiwan to keep TSMC out of China’s hands. However, O’Brien did not explicitly state that the U.S. would blow up TSMC’s facilities. TSMC is the world’s largest foundry, and Apple is its largest customer, making up 25% of its revenue. There could be some plan in place to prevent China from taking control of TSMC if China acts to invade Taiwan.
The Chinese Covet TSMC’s Chip-Making Operations
The U.S. is concerned that if China takes control of TSMC, it would use TSMC to produce advanced chips for the Chinese military to use on aircraft and other war-related machines. China has longed to become self-sufficient when it comes to chip production, which makes TSMC an inviting target and a reason for China to invade Taiwan. However, there are products needed to produce cutting-edge chips, such as Dutch firm ASML’s lithography machines, which are used to etch circuitry patterns on wafers that are thinner than the width of human hair. This machine is extremely important in the manufacturing of advanced chips, and ASML has been banned from shipping them to China. So, a Chinese-run TSMC could be handicapped right off the bat.
Taiwan Believes That Chinese Would Not Know How to Operate TSMC’s Fabs
Chen Ming-tong, director-general of Taiwan’s National Security Bureau, believes that even if China took control of TSMC during an invasion, it would not be able to operate the facilities. TSMC reportedly has an 80% yield rate for its 3nm chip production, all of which is heading to Apple. TSMC and Samsung are both shipping 3nm chips, with Apple locking up all of TSMC’s 3nm production for this year.
Global Economic Impact
Ambassador O’Brien states, “The United States and its allies are never going to let those factories fall into Chinese hands.” If China were to take control of TSMC’s operations, it would “control the world economy.” Losing access to TSMC could lead to a global recession or perhaps even a depression. TSMC and Samsung are both shipping 3nm chips, with Apple locking up all of TSMC’s 3nm production for this year.
TSMC’s Future Plans
Next year, TSMC’s U.S. fab in Phoenix, Arizona, is expected to start producing 4nm chips. A second factory in the U.S. is expected to start producing 3nm chips by 2026. By then, however, TSMC’s Taiwan-based fabs will be producing chips using a 2nm process node. Besides producing Apple’s chips, including its A-series and M-series silicon, TSMC manufactures the Snapdragon 8 Gen 2 and the Snapdragon 8 Gen 2 for Galaxy Application Processors. Other major customers include AMD, Nvidia, MediaTek, and even Intel.
Intel versus TSMC and Samsung
Intel expects to take process leadership over TSMC and Samsung in 2025. But we will need to see how this plays out. Each wafer that 3nm chips are built on costs $20,000, making the stakes high for TSMC and its customers.
