U.S. economy could be severely damaged if China takes control of TSMC says Commerce Secretary

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Back in December 2021, we told you that experts were concerned that a Chinese takeover of TSMC would send the world into disarray. Here we are, 28 months later, and this train of thought remains on the track. According to Tom’s Hardware, U.S. Commerce Secretary Gina Raimondo, during a House hearing, made it clear that the U.S. economy would be devastated if China were to invade Taiwan and take control of the world’s largest foundry (which of course is TSMC).

The U.S., according to the Commerce Secretary, is more dependent on TSMC than any country should be on one individual company. The U.S. relies on TSMC for a stunning 92% of its leading-edge chips. While there are other foundries around the world, only TSMC and Samsung Foundry will be producing cutting-edge smartphone application processors using a 3nm process node this year.

Raimondo wouldn’t give her prediction about the likelihood of an invasion of Taiwan by China, but she did emphasize the serious impact such actions would bring. The U.S. would love to become more independent when it comes to the manufacturing of cutting-edge chips. Last month, the government announced a support package consisting of a $6.6 billion subsidy and up to $5 billion in low-interest loans all expected to help TSMC produce chips at the U.S. fabs it has built in Arizona.

TSMC itself has increased the dollar amount of its commitment to its U.S. fabs from $40 billion to $65 billion and the company will add a third manufacturing facility on U.S. soil that will open in 2030. The first of the plants to open in Arizona will be Fab 21 phase 1 which will start producing 4nm and 5nm chips in 2025. The second facility will be home to Fab 21 phase 2 and will manufacture 2nm chips starting in 2028. By the end of the decade, TSMC will start production at Fab 21 phase 3.

A few years ago a U.S. security publication said that if TSMC is seized by China, the U.S. military will destroy TSMC’s Taiwan-based fabs to keep the advanced chip-making equipment out of China’s hands. And while it sounds funny to say, Taiwan has said that in the event of a war with China, it will protect TSMC’s facilities from an attack by the U.S.


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