China seizing TSMC would be 'devastating' for U.S. economy, Commerce Secretary says

TSMC fab
(Image credit: TSMC)

Gina Raimondo, the U.S. Commerce Secretary, expressed grave concerns about the potential dire consequences to the U.S. economy if China were to invade Taiwan and seize control of TSMC. She emphasized that such an event could be "absolutely devastating" to the American supply of critical technology components, reports Reuters

During a U.S. House hearing, Raimondo said that the United States is highly dependent on TSMC, acquiring 92% of its leading-edge semiconductor chips from the company that is based in Taiwan and currently produces the vast majority of its chips there. She refrained from speculating on the likelihood of such an invasion but underscored the catastrophic impact it would have on U.S. technological supplies. 

In response to these security and supply concerns, the U.S. Commerce Department has taken significant steps to bolster domestic chip production. Last month the U.S. government announced a substantial financial support package for TSMC's American operations, which includes a $6.6 billion subsidy and up to $5 billion in low-interest loans. These funds are earmarked for TSMC's fab campus near Phoenix, Arizona.

TSMC has committed to a considerable expansion of its investment in the United States. The company plans to increase its total investment from an initial $40 billion to $65 billion. This expansion includes the construction of a third semiconductor fabrication facility in Arizona by 2030, which will significantly enhance its manufacturing capacity on American soil. 

The plans for TSMC’s facilities in Arizona are rather ambitious: the company plans to build three fab modules at its site. The first fab — Fab 21 phase 1 — is set to begin operations in 2025 and produce chips on TSMC's N4 and N5 nodes (4nm and 5nm-classes), while the second fab — Fab 21 phase 2 — is expected to start making chips on N2 fabrication process (2nm-class) in 2028. This will not be TSMC's most advanced manufacturing technology at the time though. TSMC's Fab 21 phase 3 is set to start operations by the end of the decade. 

Several years ago, a U.S. security publication claimed that the United States would have to destroy TSMC fabs if Taiwan is seized by China, as the country cannot allow the People's Republic to have access to some of the best semiconductor production capabilities in the world due to national security concerns. At the time director of Taiwan's National Security Bureau said that there was no need to destro TSMC fabs because without access to world-class tools and supplies, these facilities would be useless. Taiwan has also vowed to defend the fabs from the U.S. in the event of a war with China.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • pug_s
    What a load of garbage. If the Chinese want these to 'seize' TSMC so bad, then why did they spent tens of billions on buying litography machines to be self sufficient?
  • jkflipflop98
    The truth is somewhere between the lines.

    In reality, TSMC isn't really THAT far ahead of everyone else. The rest of the world would continue on just fine. The price of luxury electronics may go up for a time, but it would stabilize in a few years.

    If China seized the equipment and facilities, it would still be nearly useless without the people that know how to actually use them. They require a tremendous amount of maintenance and knowledge to operate. Something you don't just get by having the equipment alone.

    And really, how exactly would Taiwan defend TSMC from the United States military? It's pretty hard to stop a couple of precision-guided warheads from doing what they're going to do.
  • Alvar "Miles" Udell
    Even if China did seize them, they'd be obsolete in a few years as Samsung, Intel, and TSMC's other fabs continue into the angstrom era.

    And you know AMD and nVidia would love it to happen so they could triple the price of their products.
  • usertests
    China seizing TSMC would be 'devastating' for U.S. economy, Commerce Secretary says
    Umm... don't tell them that! Lol
  • Notton
    It's a house hearing. She's giving a situation report of how things are currently.
    Obviously, you have to include worst and best case scenarios, otherwise you'd be kind of useless at the job.
    The lawmakers can then decide how to go forth from there.
  • scottslayer
    The inevitable massive war would be even worse for everyone than the hypothetical economic impact
  • Li Ken-un
    TSMC fabs built in the U.S. would be equally hobbled. The invaders won’t have the equipment/knowhow. The U.S. doesn’t have the work ethic.

    It’s only TSMC as run by Taiwan that’s cutting edge—and potentially the one they build in Japan. Work culture is the other ingredient in their secret sauce.
  • peachpuff
    Li Ken-un said:
    The U.S. doesn’t have the work ethic.

    Do you want to work 12 hours a day, 6 days a week?
  • redgarl
    China can't do it. They would turn the rest of the world against them and they would sabotage their goal of becoming the first economy in the world.

    Not to mention invading would destroy the fabs and China would not benefit for any of it unless they want to sabotage the world supply chain.

    In the end, they would be even more isolated and would never get their hands on new lithography technology.
  • redgarl
    scottslayer said:
    The inevitable massive war would be even worse for everyone than the hypothetical economic impact
    Pretty much...

    If it comes to this, the semiconductor economy would be the least of the world's worries.