Morris Chang warns of billion-dollar losses in US chip gamble
Hsinchu, Wednesday, 27 November 2024.
Former TSMC chairman Morris Chang has issued a stark warning about relocating 2nm chip production to the United States, predicting potential losses in the billions of dollars. Chang argues that keeping advanced chip production in Taiwan would create a win-win situation for both countries. His comments come as president-elect Trump’s administration signals pressure for TSMC to accelerate advanced chip manufacturing on US soil. Chang emphasizes that Taiwan’s semiconductor interests align with America’s, with Taiwan excelling in manufacturing while the US leads in design. The semiconductor veteran suggests that forcing production shifts could trigger irrational policies with far-reaching consequences for the global chip industry.
economic implications for tsmc
Morris Chang’s concerns are rooted in the economic viability of moving TSMC’s cutting-edge 2nm production to the US. The semiconductor industry is capital-intensive, and relocating such advanced processes could lead to substantial financial losses. Generating billions of dollars in revenue, TSMC’s operations are crucial for Taiwan’s economy. Shifting production to the US could disrupt this balance, potentially impacting TSMC’s profitability and its stock value (TSM:NYSE). Investors might react to such uncertainties, leading to fluctuations in the company’s market performance.
manufacturing capacity and market leadership
TSMC’s dominance in semiconductor manufacturing is attributed to its robust infrastructure and skilled workforce in Taiwan. Moving production to the US could strain its manufacturing capacity, affecting timelines and output. Taiwan’s established supply chain efficiency might be challenging to replicate in the US. This shift could impact TSMC’s market leadership, as competitors like Samsung and Intel continue to expand their capabilities. Maintaining leadership requires strategic decisions that balance innovation with operational efficiency.
geopolitical risks and global supply chains
Geopolitical tensions between the US and China have heightened concerns about global supply chains. Chang’s remarks highlight the risks of disrupting these intricate networks. The semiconductor industry relies on international cooperation, with Taiwan playing a pivotal role. Forcing TSMC to relocate could exacerbate existing tensions, affecting global chip availability. These geopolitical dynamics could influence policy decisions, impacting the semiconductor landscape and TSMC’s strategic planning.
market expert views
Industry experts echo Chang’s sentiments, emphasizing the importance of strategic stability. Analysts suggest that TSMC’s strength lies in its ability to adapt while maintaining its core operations in Taiwan. The proposed relocation could shift focus from innovation to logistical challenges. Experts advise that TSMC should leverage its existing strengths to navigate market demands without compromising its foundational advantages. The potential impact on stock prices and investor confidence underscores the need for clear communication and strategic foresight.