"We Must Seize TSMC" Urges Senior Chinese Economist

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Apparently SMIC isn't catching up fast enough

TSMC
(Image credit: TSMC)

China's government has an intense craving to take control of TSMC, reveals a report shared by Bloomberg today. The financial news organization has published some alarming quotes from Chen Wenling, chief economist at the government-run China Center for International Economic Exchanges. In brief, Chen called on Chinese authorities to "seize TSMC" if the US and the West begin to implement Russia-war style sanctions on China. She was speaking at the Chongyang Institute for Financial Studies at Renmin University at the end of May.

On the university stage, Chen told attendees, "If the US and the West impose destructive sanctions on China like sanctions against Russia, we must recover Taiwan." However, the reasoning contained within this sentence is clearly topsy-turvy. The US and other democratic powers only imposed severe sanctions on Russia after it invaded neighboring Ukraine and refused to withdraw. It is expected very similar sanctions would be applied on Chinese interests worldwide if China invades Taiwan, but not if it maintains the status quo. It is curious why Ms. Chen has put the cart before the horse.

TSMC Coveted by the CCP

In another segment of her speech, Chen claimed that the seizure of TSMC would be a great asset for China, to help it reconstruct its industrial and supply chains. This may be so, but her statement that "we must seize TSMC" sounds extremely aggressive.

Moreover, there were more comments in the senior economist's speech which appeared to encourage a Chinese military assault. Chen warned the audience at Renmin University that TSMC was quickly transferring technology to the US where it is building multiple factories. "We must not let all the goals of the transfer be achieved," she exhorted.

China Sanctions and Trade War Today

The US and its allies imposed technology sanctions during the Trump presidency in order to stifle China's advanced weapons development, and they remain in place under President Biden. Some barriers have also been applied to the trade of Chinese companies operating in security sensitive sectors like telecoms, especially where it is seen that the Chinese business has strong military links.

Actions like the above have spurred China to try and become technologically self-sufficient, for both hardware and software. We have reported on numerous China developed CPUs, GPUs and computer systems in recent months and such developments seem to be accelerating due to the tech trade restrictions imposed on China. However, the privately owned and highly competitive businesses that have fought to become the best in their fields (e.g. AMD, Apple, Arm, IBM, Intel, Nvidia, Samsung, Qualcomm, TSMC, etc.) continue to research and invest. They won't be easy to catch, as they are moving targets.

China's latest rhetoric suggests there's a growing faction that's not interested in catching up through normal means, instead hoping to close the gap via a hostile takeover of Taiwan. That could be disastrous for many of the companies just mentioned, not to mention the global technology landscape.

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Mark Tyson
Mark Tyson
News Editor

Mark Tyson is a news editor at Tom's Hardware. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.

34 Comments Comment from the forums
  • digitalgriffin
    China's own advanced node initiatives are still well behind what Intel/Samsung/GloFo/and TSMC. But we all know the most advanced nodes for the worlds most advanced products come from TSMC. The objective here is to give clear access to technology China lacks and could freely export to other friendly nations like Russia. But also to hold the world hostage, in much the same manner we are influencing Oligarchs by seizing their boats. If you cripple enough companies, they would hope to have enough influence end such sanctions. But China forgets a number of critical stages to chip manufacturing depend on world involvement like noble gases.

    For this strategy to be effective for China, they have to do it BEFORE TSMC builds fabs in other parts of the worlds like USA. But if I were TSMC, I would personally sabotage the plant if China tried to take over. It would be a pyric victory at best. If China knows ahead a time that a majority of Taiwan's value will be lost in an invasion, they may think twice.

    But invasion will not be China's strategy. They are likely planning a blockade with a massive naval fleet backed with anti shipping warfare. Thus the plan is based on starving Taiwan into submission, thus not requiring them to fire a shot, and reducing world outcry. It's the most logical conclusion based on massive military spending on the navy and anti ship missile systems.
    Reply
  • Heat_Fan89
    I wondered a few weeks ago if this was going to happen and now I read this. Yes it is quite possible and honestly it begs the question, what took the CCP so long? When the US is going around the world seizing assets from other Countries it disagrees with so as to punish them, it makes others who do business with the US, really nervous. Could they be the next target? The White House did itself no favors by threatening China over it's partnership with Russia.

    China has the upper hand in all of this because pretty much everything is made in China these days. IIRC even Samsung uses China's manufacturing base for many of it's products.
    Reply
  • digitalgriffin
    Heat_Fan89 said:
    I wondered a few weeks ago if this was going to happen and now I read this. Yes it is quite possible and honestly it begs the question, what took the CCP so long? When the US is going around the world seizing assets from other Countries it disagrees with so as to punish them, it makes others who do business with the US, really nervous. Could they be the next target? The White House did itself no favors by threatening China over it's partnership with Russia.

    China has the upper hand in all of this because pretty much everything is made in China these days. IIRC even Samsung uses China's manufacturing base for many of it's products.

    I have examined 3 economic videos if China lost the west as a trading partner. They reach a similar conclusion: Both sides would suffer massively. Eventually both would recover, but the USA would recover better/faster. China has no social safety net for economic downturn. And the majority of trading partners China would have left would be much smaller in terms of trade. While things like wheat and oil from Russia would benefit China, the overall net loss would be staggering.
    Reply
  • Heat_Fan89
    digitalgriffin said:
    I have examined 3 economic videos if China lost the west as a trading partner. They reach a similar conclusion: Both sides would suffer massively. Eventually both would recover, but the USA would recover better/faster. China has no social safety net for economic downturn. And the majority of trading partners China would have left would be much smaller in terms of trade. While things like wheat and oil from Russia would benefit China, the overall net loss would be staggering.
    That is the thinking if one listens to the West's propaganda. The West is in decline and has been for many decades. The debt levels of the West are totally insane and it no longer has a manufacturing base. The East is in far better shape than the West because the East has a much higher population and now controls manufacturing. Russia has the world's greatest amount of natural resources. The East is where the West has been targeting for growth the last 10-20 yrs.

    I do agree that there are no clear winners but in the end the East will just dust themselves off and start over and do business amongst themselves which is already been happening.
    Reply
  • digitalgriffin
    Heat_Fan89 said:
    That is the thinking if one listens to the West's propaganda. The West is in decline and has been for many decades. The debt levels of the West are totally insane and it no longer has a manufacturing base. The East is in far better shape than the West because the East has a much higher population and now controls manufacturing. Russia has the world's greatest amount of natural resources. The East is where the West has been targeting for growth the last 10-20 yrs.

    I do agree that there are no clear winners but in the end the East will just dust themselves off and start over and do business amongst themselves which is already been happening.

    Well then I wish you the best of luck as you suffer. But the east isn't as strong as it seems. A very large percentage of China's economic growth is based on construction. And thanks to the 3 red line rule, their economy is collapsing hard because it was a Ponzi scheme.

    As to Russia's natural resources, they have oil, gas, wheat, some Uranium deposits, and titanium. But the russian infrastructure has been stuck in the early 90's. It is running at near capacity. It's growth (1/3rd) was fueled by sales of raw materials to Europe. Like I said it will take time to build new infrastructure to countries like China. Their east west railroad is limited in size, and most of the power and materials are in western Russia.

    Make no mistake, both sides will suffer greatly. And I were the Chinese government, dealing with a billion plus hungry starving Chinese is a big problem. They panicked during 2007 housing crisis global recession. People were jumping to their deaths as they had no safety net. And this will make it look like a picnic.
    Reply
  • RodroX
    We are all trying to get back to normal after a global pandemic like the world has never see in the last years.

    Goverment leaders instead of thinking about that, and thinking what to do to help the citizen go back to thier normal life + re-think this new global weakness, are as always, looking for the next drama plot and next power move.

    Its seems they haven't learn anything after +2000 years of history.

    What a real pitty.
    Reply
  • digitalgriffin
    RodroX said:
    We are all trying to get back to nromal after a global pandemic like the world has never see in the last years.

    Goverment leaders instead of thinking about that, and thinking what to do to help the citizen go back to thier normal life + re-think this new global weakness, are as always, looking for the next drama plot and next power move.

    Its seems they haven't learn anything after +2000 years of history.

    What a real pitty.

    I agree. Personal ambitions of pride & power seem to always outweigh the needs of the people.
    Reply
  • gg83
    Heat_Fan89 said:
    That is the thinking if one listens to the West's propaganda. The West is in decline and has been for many decades. The debt levels of the West are totally insane and it no longer has a manufacturing base. The East is in far better shape than the West because the East has a much higher population and now controls manufacturing. Russia has the world's greatest amount of natural resources. The East is where the West has been targeting for growth the last 10-20 yrs.

    I do agree that there are no clear winners but in the end the East will just dust themselves off and start over and do business amongst themselves which is already been happening.
    I would like to know your sources. Being an American I must only read propaganda. Please enlighten me as to where I can get unadulterated news.
    Reply
  • pug_s
    I take this as a grain of salt. The guy who says this works for China Center for International Economic Exchanges, which is a Chinese think tank. He doesn't represent the government , military or SMIC for all we know and this is his opinion. I'm pretty sure that as long as TSMC keeps selling processors to various Chinese companies, TSMC won't be seized.
    Reply
  • shady28
    China's not going to do anything unless their economic situation de-stabilizes. They can't afford to do something so obvious that directly triggers such an economic upheaval, they'd be facing revolution.

    Now, If their economy begins to tank for other less clear reasons (like, real estate bubbles bursting or debt market implosion), then all bets are off and I'd say the odds become quite high. They'll probably blame the west for the economic issues in this scenario to get public support. Once they have the public angry, they won't be able to stop.
    Reply