World's Largest Chip Maker TSMC Warns Tensions Between China And Taiwan Could Spell Disaster

Tensions between China and Taiwan have some concerned an invasion could render the most-advanced chip factory in the world "not operable." TSMC Chair Mark Liu emphasized in a recent interview, "The war brings no winners, everybody's losers."

U.S. House of Representatives Speaker Nancy Pelosi arrived in Taiwan late yesterday. The trip is said to be an attempt to show America's commitment to the Chinese-claimed self-ruled island in the midst of rising tensions between Taiwan and China. Pelosi is the highest-level U.S. government official to visit the island in 25 years. Those tensions also have companies like TSMC uneasy as well, as the company's Chair Mark Liu has expressed his concern of what a Chinese invasion into Taiwan would mean for the chip making tech company.

"Nobody can control TSMC by force. If you take military force or invasion, you will render TSMC factory not operable," Liu stated in a recent interview with CNN. "Because this is such a sophisticated manufacturing facility, it depends on real-time connection with the outside world, with Europe, with Japan, with U.S., from materials to chemicals to spare parts to engineering software and diagnosis."

TSMC is a world leader in chip manufacturing and produces chips for companies such as Apple and Qualcomm. The tech company produces Apple's A-series and M-series chips and has hold of 50% of the world's semiconductor foundry market.

The House of Representatives passed the Chips and Science Act last week, which is slated to set aside billions of dollars in incentives for companies to build chip factories in the United States. Those who backed the legislation stated that it was imperative to pass the act to ensure the supply of efficient and modern chips for U.S. usage in case China ever decided to invade, or otherwise make it difficult to manufacture chips in Taiwan. President Biden was expected to sign the bill into law yesterday but has since suffered a relapse of Covid.

A lot of the money attached to the Chips and Science Act will go to American companies, such as Intel who recently broke ground on a new facility in Ohio. However, TSMC could benefit from the bill as well, as it is building a $12 million chip factory in Arizona.

Liu likened the possibility of war between Taiwan and China to the conflict between Russia and Ukraine. While he admits that the two conflicts are different in many ways, there could be similar economic impacts. Liu remarked that an invasion of Taiwan would in turn cause economic turmoil for China, Taiwan and Western countries.

"How can we avoid war? How can we ensure that the engine of the world economy continues humming, and let's have a fair competition," Liu concluded.

*Update 8/3/2022 1:10pm EST: President Biden announced Wednesday that he will be signing the Chips and Science Act into law on August 9, 2022, in a Rose Garden ceremony.

Top Image Credit: Dmitry Steshenko from Pixabay