TSMC is accelerating to become “USMC”?

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Source: WeChat official account: Buyidao has been authorized to reprint

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The first TSMC engineers arriving in the United States soon found themselves “second-class citizens”.

After leaving Taiwan, the American engineers who came to Taiwan for training a year ago were complained by their Taiwanese counterparts that they were American “giant babies”.

When TSMC founder Zhang Zhongmou confirmed for the first time that TSMC would expand its investment in the United States and set up a 3 nanometer wafer factory, two leaked screenshots from Taiwan’s largest social networking website PTT began to spread.

Some people on the Internet said that TSMC is accelerating to become “USMC”, and the island’s complaints about Tsai Ing wen’s authority “selling Taiwan” are growing.

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TSMC’s “de Taiwan” process is accelerating.

On November 21, when Zhang Zhongmou, founder of TSMC, attended a press conference in Taiwan, he officially confirmed that TSMC’s 5nm wafer factory in Arizona will hold the first batch of machine equipment entry ceremony on December 6, which means that the factory has been partially completed. This will be the most advanced semiconductor manufacturing process in the United States.

When asked whether the 3nm wafer factory might also be located in Arizona, Zhang Zhongmou replied: “Later, after the 5nm (wafer factory).”.

According to the report, Zhang Zhongmou’s remarks confirmed for the first time that TSMC would expand its investment in establishing a 3 nanometer wafer factory in the United States after the 5 nanometer wafer factory.

Zhang Zhongmou said that according to his understanding, Secretary of Commerce Raymond of the United States had agreed to attend. This was very rare. Secretary of Commerce flew from Washington to Arizona and heard that he would return on the same day. “President Biden was also invited. I wonder if he will come.”.

As soon as this speech was made, it immediately attracted great attention from the semiconductor industry.

This front office authority has repeatedly declared that semiconductor chips with a 3-nanometer process will not be transferred to the United States. Taiwan’s island is worried that the establishment of a 3 nanometer wafer factory in the United States is “the outward migration of advanced manufacturing processes” and the outflow of key cores. Some netizens also described TSMC’s investment in the United States as Yugong Yishan, saying that this move is a “holy mountain to protect the country”.

The complaints about Tsai Ing wen’s “selling Taiwan” were so loud that Wang Meihua, the “Minister of Economy”, issued three statements on the 22nd, reiterating that all advanced processes below 3 nanometers would stay in Taiwan.

But netizens did not buy it.

The media also disclosed that since the beginning of this month, 300 TSMC employees have boarded the chartered plane to the 5 nanometer wafer factory in Arizona, the United States, which is just the beginning.

It is reported that in the next few months, there will be 6 chartered planes to send more than 1000 engineers and their families to the United States. In addition to TSMC’s own engineers, Taiwan’s supply chain manufacturers will also go to the United States.

In this regard, Taiwan media reported that these engineers who went to the United States are not only the main force of TSMC’s new wafer factory in Arizona, but also the key talents for the revitalization of the chip manufacturing industry in the United States.

Taiwan media said frankly that “TSMC’s investment will move the entire industrial cluster to the United States”.

Netizens questioned that if advanced manufacturing processes were moved to the United States, Taiwanese talents would also send them to the United States, bringing their families and pets with them. Is that love for Taiwan?

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Recently, on PTT, Taiwan’s largest community website, such an explosive screenshot began to circulate, saying that the first batch of TSMC engineers arrived in the United States and found themselves working in the United States as “second-class citizens”.

Not only is the vacation 7 days less than that of American colleagues, but also the workload and salary are much less.

Interestingly, before the operation of the wafer manufacturing plant in Arizona, a group of American engineers were also sent to Taiwan’s Taiji Power Plant for training for a year. After these American engineers returned to the United States, a large number of Taiwanese complained on PTT.

The comments on PTT complain that Americans earn more than their Taiwanese counterparts, do more easily than their Taiwanese counterparts, and even have less education than their Taiwanese counterparts. When encountering problems, they only ask Taiwanese people to “come and have a look”. Therefore, some Taiwanese call these American counterparts “giant babies”;

One side also said that TSMC prohibited smoking inside the facility, but their American counterparts continued to smoke in the facility, resulting in “the area from the dormitory to the pantry was full of smoke”.

This also confirms Zhang Zhongmou’s statement at the press conference on the 21st from the side:

I know that the cost of making chips in the United States will be at least 55% higher than that in Taiwan.

Then why would TSMC go to the United States to set up a factory at the risk of increasing costs?

Zhang Zhongmou then said, “But this cannot prevent some production capacity from being transferred to the United States. The chip manufacturing process we moved here is the most advanced among all American companies, which is very important for the United States.”

Oh, because “this is very important for the United States”.

The United States is taking TSMC step by step.

The intention of the United States to promote the “de Taiwan” of chips and serve its own geopolitical interests is clear.

Foreign media have previously disclosed that the United States has carried out various war games. If the worst happens to the situation in the Taiwan Strait, it will destroy all facilities of TSMC, prevent Chinese Mainland from acquiring advanced chip manufacturing technology, assist in evacuating Taiwan semiconductor engineers, and reduce the impact of the global supply chain.

This fully shows that the United States only regards Taiwan as a “pawn” to contain China. What the US side has always considered is how to avoid its own losses to the greatest extent, while maximizing its interests, and even “looting”.

It is hard to say that TSMC has not seen this.

For building a wafer factory in Arizona, the outside world believed that TSMC had responded to the requirements of the U.S. government and that the U.S. had just passed a $52 billion chip bill. However, Zhang Zhongmou thought that such subsidies were far from enough. “Although the domestic chip output of the United States will increase, the relative unit cost will also increase, which makes it difficult for the United States to compete in the international market.”

TSMC did so even though it anticipated that costs would increase and profits would decrease. Experts believe that there are two factors:

One is to serve customers of TSMC in the United States. After all, American customers accounted for eight of TSMC’s top ten customers in terms of revenue, with Apple accounting for more than 1/4 of the revenue; In addition, recent news pointed out that Tesla, a major electric vehicle manufacturer, is going to transfer the new generation of FSD chips from Samsung to TSMC, which gives Tesla the opportunity to become one of the top seven customers of TSMC in 2023.

The second is to meet the diversified supply chain security needs of American customers. At present, many chip design manufacturers hope to decentralize chip manufacturing supply sources to avoid supply chain risks. For example, Apple plans to place some of its chips in the United States, and will subsequently purchase chips from European wafer manufacturers.

Cook has publicly said that it may not be a good strategy for Apple to supply 60% of its global processors from Taiwan and 60% from anywhere.

Cai Lixing, CEO of MediaTek, a major customer of TSMC, also said that under the background that some large equipment manufacturers require chip suppliers to have diversified sources, MediaTek will have to find multiple sources for the same chip if business needs. This statement also echoes the decision that MediaTek had previously reached a cooperation agreement with Intel and planned to entrust some chips to Intel OEM.

Therefore, it is clear that TSMC has to face the trend of “de Taiwan” after the United States stirred up the semiconductor industry with the sanctions stick. To build a factory in the United States is not only a “vote”, but also a “reassurance” for suppliers.

But can this “reassuring pill” be reassuring?

In fact, Huang Chongren, the chairman of the foundry of LSMC, made it clear in an interview with the media not long ago that the reason why Taiwan’s semiconductor industry can take the lead in the world is mainly because of the good quality of engineers, the relatively low cost and the lower price than the United States. Because chip trading is an international price, TSMC can always make money and invest the money in the development of advanced manufacturing processes.

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Therefore, without these conditions, even if TSMC moves to the United States, its advantages may not continue to exist.

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To be sure, TSMC is facing increasing pressure from the United States.

An article in the New York Times on the 17th summarized Washington’s current attitude towards Taiwan’s chip industry:

Taiwan faces growing unease in Washington. U.S. Commerce Secretary Gina Raymond and others have repeatedly said that the United States needs to reduce its dependence on Taiwan in terms of chips needed for advanced weapons.

It is not enough just to be on guard. The United States simply put pressure on TSMC to set up a factory in Arizona to “help the United States diversify its chip sources”.

While exerting pressure and inducing TSMC to reduce its connection with Chinese Mainland, the United States has also begun to engage in talent.

In particular, last month the United States further upgraded its ban on Chinese chips, extending the scope from hardware to software. According to the New York Times reporter, this will further push TSMC, as a major chip manufacturer in Taiwan, “to the forefront of possible global supply chain disruption”.

The ban also requires that people with US citizenship or green cards must not work in factories in Chinese Mainland. Some American scholars said that this would force about 200 engineers currently working in the chip industry in Chinese Mainland to face choices:

Either give up the job opportunities and prospects currently in full swing, or give up American citizenship.

What impact will these trends of TSMC becoming the “American Semiconductor” and the US’s tough moves in the field of chip talents in a wider range have on the chip industry in Chinese Mainland?

An expert in the semiconductor field said that TSMC, as an enterprise, does not have much room for strategic choices under the current situation of China US relations.

For the mainland, TSMC has always clearly seen the close connection between the mainland and the global semiconductor industry chain supply chain. The position of Chinese Mainland in the global electronics industry determines that no company in the semiconductor industry can ignore the mainland. TSMC certainly knows that.

However, judging from the past development trajectory, TSMC’s attempt to transfer advanced production capacity to the United States is not a temporary choice made under increasing pressure from the island’s politics and the United States, but rather an established strategy, which it has been doing in recent years.

Because TSMC is an enterprise that has grown up from Taiwan. Although the United States has increased its business risk by cracking down on China, TSMC and even the entire Taiwan chip industry are more worried about the aggravation of turbulence and even conflicts in the Taiwan Strait. Therefore, it has always considered transferring some advanced energy to the United States and even Japan.

The United States has made the chip field more secure. The current situation of enterprises like TSMC will inevitably put pressure on the chip industry in Chinese Mainland.

But to be honest, this kind of pressure is no longer a day or two, and the entire mainland chip industry has been prepared in terms of psychology and action.

No matter how the external environment changes, the most important focus of the chip industry in Chinese Mainland is to ensure and further optimize the existing technology and investment routes. This is the key for us to overcome challenges and become stronger.

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