Trump Deals Blow to China: Taiwan Chip Manufacturer to Move Factory to U.S
Announcement is bad news for Chinese telecommunications company Huawei
President Donald Trump has delivered another blow to the Chinese Communist Party (CCP) after announcing that a Taiwan chip manufacturer will construct a new plant in the United States.
The move is significant as it will seriously restrict the company’s ability to sell to China’s Huawei.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) announced the move to build a new factory in Arizona as part of a $12 billion deal with the US.
The company said in a statement:
The factory will “create over 1,600 high-tech professional jobs directly, and thousands of indirect jobs in the semiconductor ecosystem."
“TSMC welcomes continued strong partnership with the U.S. administration and the State of Arizona on this project,” the company added.
“The strong investment climate in the United States and its talented workforce make this and future investments in the U.S. attractive to TSMC," the statement continues.
"U.S. adoption of forward-looking investment policies to enable a globally competitive environment for a leading edge semiconductor technology operation in the U.S. will be crucial to the success of this project.”
TSMC’s decision to locate the plant in the US and severely restrict TSMC chip sales to Huawei, a U.S. Commerce Department official said.
The proposed restrictions could threaten TSMC’s 14% of sales from Huawei, and delay the rollout of 5G mobile network, Reuters reported.
The plant “will produce the most sophisticated 5-nanometer chips, which can be used in high-end defense and communications devices.”
Secretary of State Mike Pompeo said of the move:
“The U.S. welcomes TSMC’s intention to invest $12B in the most advanced 5-nanometer semiconductor fabrication foundry in the world.
"This deal bolsters U.S. national security at a time when China is trying to dominate cutting-edge tech and control critical industries.”
Pompeo said the chip would be used for 5G base stations and F-35 fighter jets, amongst other things.
The U.S. welcomes TSMC’s intention to invest $12B in the most advanced 5-nanometer semiconductor fabrication foundry in the world. This deal bolsters U.S. national security at a time when China is trying to dominate cutting-edge tech and control critical industries.— Secretary Pompeo (@SecPompeo) May 15, 2020
U.S. Secretary of Commerce Wilbur Ross said:
“TSMC’s plan to build a $12 billion semiconductor facility in Arizona is yet another indication that President Trump’s policy agenda has led to a renaissance in American manufacturing and made the United States the most attractive place in the world to invest.”
“This plan is the result of years of close collaboration among TSMC, the Governor of Arizona and his staff, and the Administration, particularly our Assistant Secretary of Commerce Ian Steff,” Ross added.
“This announcement is the product of strong cooperation between federal, state, and local governments, leveraging the unprecedented investment climate for manufacturers created by President Trump."
"Our global team of Commerce professionals stands ready to work with additional semiconductor companies looking to expand their operations and investments in the United States.”
The announcement comes weeks after Japan began a "mass exodus" of manufacturing from China as the country moves away from China's supply chain.
The Japanese government sought to end reliance on its Chinese neighbor following the coronavirus pandemic that originated in China.
Japanese Prime Minister Shinzo Abe has vowed to build "an economy that is less dependent on one country, China."
Abe is proposing that Japan brings much of its manufacturing home and imports less from abroad so "the nation can better avoid supply chain disruptions" in the future, Nikkei Asia Review reports.