Chip decoupling risks costly failure, warns APEC, founder of TSMC

TAIPEI – Countries’ efforts to bring chip production to land could backfire, failing to achieve self-sufficiency despite massive spending, warned Morris Chang, founder of leading contract chip maker Taiwan Semiconductor Manufacturing Co.

“If no one says anything about it, it could turn out to be terrible,” Chang said at a press conference on Friday after an informal Asia-Pacific economic cooperation conference, where he was the sent from Taiwan.

“What can happen is that after hundreds of billions and many years, the result will still be a not quite self-sufficient and expensive supply chain,” Chang said.

The warning from one of the world’s most respected figures in the global semiconductor industry comes as the United States, Europe, Japan and China seek to increase production in their countries, offering aid government to ensure that chips – which power devices from consumer electronics to military and space technologies – – stay within their borders.

Chang said he agreed that chips essential to national security should be manufactured domestically, but “it will make more sense if all other semiconductors for civilian use are traded freely internationally.”

Chang added that in recent decades, free trade has helped advance semiconductor technology. “In turn, the ever-increasing complexity of technology has led to the offshoring of the supply chain. “

“It would be very impractical to try to turn back the clock. If that is attempted, costs will rise and technological advancements may slow down,” quoting his own speech at the virtual meeting of APEC leaders.

Flea nationalism has gained momentum over the past year. The US Senate passed a bipartisan bill worth $ 52 billion to support the national chip industry, while the European Union aims to localize 20% of semiconductor production by 2030 Japan and China have also made the development of their semiconductor industry a top political priority.

TSMC, the world’s most valuable chipmaker Chang founded in 1987, expands its global presence, expands production to the United States and China, and has confirmed that it is actively considering plans for its first factory in Japan. . This represents a major shift in its long-standing strategy of concentrating the majority of production in Taiwan, which it believes is the most profitable mode of operation.

Pat Gelsinger, CEO of leading US chip maker Intel, said his company will add several advanced chip factories in several countries over the next few years. He also said his company would help increase the US market share of global chip production from 12% to 30% in 10 years.

In the latest Washington Supply Chain Review report, he pointed out that the reliance on advanced chip production in Taiwan is a potential vulnerability for semiconductor supply chains. A disruption in chip production in Taiwan could result in nearly $ 500 billion in lost revenue for electronics makers who depend on the island.

“As the need for semiconductor infrastructure security has grown in recent years, we are expanding our global manufacturing footprint to maintain and enhance our competitive advantages and to better serve our customers in the new geopolitical environment,” said the president of TSMC, Mark Liu, in a statement. call Thursday.

Chang is considered the godfather of the Taiwanese chip industry – the world’s number two after the United States and the largest source of advanced chips – and the founder of the contract foundry’s business model.

TSMC is the world’s largest contract chip maker with over 50% market share, supplying major chip developers from Apple, Qualcomm, Nvidia, NXP to Sony and hundreds more. Chang, now 90, retired from TSMC in 2018.