TSMC faces pressure to choose a side in the US-China technology war

The world’s largest contract chipmaker is under pressure to choose a side to the US-China rivalry for technological dominance and has created a dilemma for an organization that has become critical to the global supply chain.

Taiwan Semiconductor Manufacturing Company, which has been in the spotlight Global chips shortage, Indirectly facing allegations of Chinese military supplies. This has further embroiled the semiconductor group in U.S. propaganda to reduce China’s access to high-tech components.

This raises a big question mark for TSMC and other Taiwanese groups as to whether they are committed to a larger US market or to China, which is growing rapidly.

Taiwan challenged in a report on Wednesday that TSMC and Taipei-based chip designer Alchip have supported Chinese military development. “Our companies adhere to the United States, domestic and multilateral rules to meet the demand for global chips,” Economy Minister Wang Mei-hua told reporters.

This was followed by a Washington Post Report Chinese supercomputer manufacturer Phytium used TSMC-made chips in equipment to test People’s Liberation Army hypersonic missiles, it is also an important U.S. military supplier.

The US Department of Commerce has set up Phytium and six other Chinese supercomputing companies.Entity list“Last week, with the exception of American suppliers exporting directly to the company without a special license. The rules do not apply to foreign companies, but both TSMC and a Taiwanese chip designer have actively stopped selling Phytium.

TSMC declined to comment.

Washington’s move proves that “the United States is pressuring Taiwan and TSMC to support its supply chain,” said Paul Triolo, an analyst at the consulting Eurasia Group. They also challenged TSMC’s position of neutrality, historical position and the company’s strategy of “being the founder of everyone”.

Last year, US TSMC accounted for more than 60 percent of sales, compared to only 20 percent in China. The second is the rapidly growing market for semiconductors, which has turned China into a lucrative opportunity for TSMC, “Chinese tech companies make custom-edge consumer electronics, a huge source of growth for TSMC’s advanced nodes,” Triolo added.

TSMC had previously been embroiled in US-China tensions. About two years ago, The Trump administration said Chips sold by the company to Huawei Technology Group are being used in Chinese missiles.

Washington’s efforts to draw TSMC away from Beijing have led the chip company to take parts of its supply chain to American soil.

The TSMC announced their plans last May amid pressure from the Trump administration Open a plant in PhoenixWhich would bring it closer to the expeditions of the U.S. military builders Raytheon and Honeywell. Washington wants sensitive technology like the TSMC computer chips used in F-35 stealth fighter jets to make in the United States.

Su Tzu-yun, director of the Taipei-based National Defense and Security Research Institute, believed that in recent times Increased tension The island’s technical firms between China and Taiwan had little alternative in the U.S. meant Taiwan “shares national security interests with the United States as well as the values ​​of freedom and democracy,” he added.

The US pushes TSMC at a distance from China Still hitting the company’s sales, Ensuring strong demand, including the global semiconductor deficit.

In the past, the organization has been humble enough to adapt to geopolitical shifts. After the suspension of Huawei sales last summer due to U.S. sanctions, TSMC quickly removed lost orders and replaced shipments with Apple, removing demand for the advancement of the newly released iPhone 12 5 nanometer chips.

Following TSMC’s leadership could be even tougher for other Taiwanese technology groups, many of which rely on the mainland Chinese market. Beijing has set foot Running military tactics around Taiwan last month, those agencies are keeping an eye on the need to diversify their client bases.

Johnny Shen, chief executive of Alchip, said the company had stopped shipments of Fitium, which accounted for 39 percent of its revenue last year. He added that the company was facing “a big challenge”: Taipei-listed stocks have fallen 40 percent since Washington blacklisted supercomputer manufacturers last Thursday, and shares of TSMC have just responded. Shane told investors that the products and services provided to Phytium are for civilian, not military, use.

For the larger industry, the politicization of the semiconductor supply chain has created uncertainty between technology groups and their clients. Triolo of Eurasia said that “confidence built up year after year is a huge source of innovation.”

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