tsmc navigates geopolitical storm as us-china tensions rise
Taipei, Wednesday, 1 January 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) finds itself at the center of escalating geopolitical tensions between the United States and China. As these superpowers clash, TSMC’s strategic decisions have become crucial, impacting both its operational reach and stock market performance. Recently, TSMC has been diversifying its manufacturing footprint, notably expanding into Japan, where operations are fast-tracking compared to the United States. This shift has sparked concerns in Taiwan about the future identity of TSMC as a Taiwanese entity. The geopolitical landscape has intensified, with U.S. initiatives pushing for TSMC’s production relocation from Taiwan, while Japan efficiently capitalizes on this transition. This situation underscores the broader geopolitical stakes at play, as TSMC’s role in the global semiconductor supply chain becomes increasingly pivotal. The company’s actions in response to these pressures will shape its future and influence global technology markets.
Market growth amid geopolitical uncertainty
TSMC’s market position remains robust despite mounting geopolitical pressures. The company’s revenue is projected to surge by 36% year-over-year in Q3 2024, substantially outpacing the industry’s average growth of 4% [2]. The global semiconductor market shows promising momentum, with forecasts indicating growth of 11.2% in 2025 [2]. However, the anticipated return of Donald Trump to the presidency in January 2025 introduces new uncertainties for the semiconductor sector [2].
Japan’s strategic advantage
Japan has emerged as a frontrunner in TSMC’s global expansion. The company’s Kumamoto facility began production in December 2024, manufacturing 12 to 28-nanometer chips for automotive and sensor applications [1]. A second plant, focused on 6-nanometer technology, is scheduled for construction in early 2025, with production targeted for late 2027 [1]. These Japanese operations represent a total investment of $22.5 billion [1].
U.S. production delays and challenges
TSMC’s American expansion faces significant hurdles. The Arizona facility, initially budgeted at $12 billion, has seen costs balloon to $60 billion [1]. Production timelines have also slipped, with 4-nanometer chip manufacturing now expected to commence in early 2025, while the planned 3-nanometer facility’s start date has been pushed to 2028 [1]. These delays contrast sharply with Japan’s efficient execution of similar projects.
Rising tensions and supply chain implications
The semiconductor industry faces increasing complexity due to U.S.-China tensions. Recent developments include U.S. plans to blacklist companies ordering TSMC chips for Chinese processors [4]. The situation has led to increased semiconductor smuggling activities as of December 2024 [4], highlighting the growing challenges in maintaining stable supply chains amid geopolitical restrictions.