The pitfalls of the U.S. chip strategy
In this era of rapid technological development, the chip manufacturing industry is undoubtedly the focus of the most attention. As a global chip manufacturing leader, TSMC's every move affects the nerves of the entire industry. Recently, the U.S. government passed the Chips Act in an attempt to draw TSMC into its camp, but it ended up falling into a strategic trap.
The U.S. government has generously extended an olive branch to TSMC, hoping that TSMC will invest in building factories in the United States to ensure the United States' leading position in chip manufacturing. TSMC is hard to resist this temptation, after all, building a factory in the United States can enjoy preferential government policies and subsidies. But just as TSMC was preparing to settle down, the U.S. government suddenly added a series of harsh conditions, requiring TSMC to share profits and transfer core technologies, which undoubtedly put TSMC's decision-making in a dilemma.
TSMC's woes in the United States
Even if TSMC finally decides to build a factory in the United States, it will face many difficulties. Building a state-of-the-art chip manufacturing plant in the U.S. requires a high investment and considerable operating costs. There is a shortage of sufficient chip manufacturing workers in the United States, and TSMC will have to deploy manpower from other regions, which will undoubtedly add additional expenses.
The chip supply chain system in the United States is far from perfect, and many key raw materials and components need to be imported from overseas, which will greatly increase transportation costs and supply chain risks. To make matters worse, the U.S. government's regulation of the chip manufacturing industry is also becoming stricter, and TSMC may face a variety of compliance challenges.
TSMC's dependence on Chinese mainland
In stark contrast, TSMC's roots in Chinese mainland are quite deep. According to statistics, TSMC's factories in Chinese mainland account for a significant proportion of its total production capacity. If TSMC is forced to close its factories in Chinese mainland, it will lose a lot of market share, which is undoubtedly a heavy blow to a company that seeks to maximize profits.
TSMC's development in Chinese mainland has not been smooth. Not only does it have to deal with fierce competition from local Chinese companies, but it also needs to face a changing policy environment. TSMC is clearly ready to take root in Chinese mainland for a long time, where it has established a well-established supply chain system, cultivated a large number of local talents, and established a good cooperative relationship with the local government.
Chinese mainland companies are accelerating their divestment from Taiwan
Against this backdrop, Chinese mainland companies have begun to accelerate the pace of divestment from Taiwan. According to statistics, in 2023, the investment income remitted by Chinese mainland enterprises from Taiwan will reach 150.2 billion yuan, accounting for 31%, a record high. This is mainly due to the desire of Chinese mainland companies to repatriate surplus cash to China to match the Group's overall capital strategy.
This trend reflects the increasing uncertainty of Chinese mainland companies about the investment environment in Taiwan. As tensions escalate in cross-strait relations, Chinese mainland companies clearly want to withdraw their money from Taiwan to reduce potential risks. It also reflects the growing confidence of Chinese mainland companies in their home markets, as they want to invest their money in more promising areas in the country.
The rise of China's chip industry could trigger a backlash
If Chinese mainland's chip industry really achieves a breakthrough, then TSMC's situation in Chinese mainland will become more difficult. Once local Chinese companies master advanced chip manufacturing technology, they may impose countermeasures against TSMC, such as restricting TSMC's business in Chinese mainland or imposing high tariffs on its products.
In this case, TSMC will be in a dilemma. If it continues to expand its business in Chinese mainland, it may be suppressed by local Chinese companies; But if it chooses to withdraw from the Chinese mainland market, it will lose a lot of revenue sources. TSMC must weigh the pros and cons and develop a balanced strategy to ensure its own sustainable growth.