Joe Biden visits TSMC plant in Arizona

US President Joe Biden travelled to Arizona on Tuesday along with a retinue of politicians and tech titans to celebrate economic plans that he claimed would usher in a new era of manufacturing, create good-paying jobs, build resilient supply chains, and help the US “win the economic competition of the 21st century”.

“American manufacturing is back ”, he declared at a ceremony to mark the installation of the first piece of production equipment at a $12 billion facility of the Taiwan Semiconductor Manufacturing Company, better known as TSMC, in Phoenix.

“Over 30 years ago America had more than 30 per cent of the global chip production. Then something happened. American manufacturing – the backbone of our economy – began to get hollowed out. Companies moved jobs overseas,” Biden said

“But folks, where’s it written that America can’t lead the world once again in manufacturing?”

The remarks came in the presence of Morris Chang, the founder of TSMC, the world’s largest chip manufacturer, who just months ago called Biden’s ambitions to boost domestic chip production “a wasteful, expensive exercise in futility”.

Also in attendance was Tim Cook, the Apple chief executive who has faced criticism in the US for his close ties to China, where much of Apple’s production is located.

The TSMC Phoenix plant was announced in 2020 during the Donald Trump administration. However, the project received massive grants and subsidies under Biden’s signature Chips & Science Act, which offers more than $50 billion in subsidies to support US chips research and development.

The facility is expected to go online by 2024, producing four-nanometer chips that are used for iPhone 14 Pro processors.

“The chips will power iPhones and MacBooks; as Tim Cook could attest, Apple had to buy all the advanced chips from overseas. Now they’re going to bring more of their supply chain here at home. It can be a game changer”, Biden said.

Owing to disruptions related to China’s strict zero-Covid policies, sporadic lockdowns and recent violent clashes at one of its factories, Apple is reportedly trying to move some of its production away from the country.

Calling the Phoenix plant a state-of-the-art facility, TSMC Chairman Mark Liu said that his company was taking a “giant step forward to help build a vibrant semiconductor ecosystem in the United States”.

Liu’s comments were in sharp contrast to his statement to TSMC shareholders in June. Then, he said that “the United States lacked the rich ecosystem of suppliers and large pool of skilled workers”, though he added that TSMC would proceed with its plans in the US “no matter what.”

According to a 2020 study by George Washington University, foreign-born workers hold about 40 per cent of America’s semiconductor engineering jobs.

On Tuesday, Liu announced the company would build a second fabricating plant in Arizona, with an overall investment of $40 billion to produce more advanced three-nanometer semiconductors.

A vital component of the digital age, semiconductors operate almost everything from fighter jets to smartphones to automobiles. The US accounts for only about 12 per cent of the global chip output.

The US realised its vulnerability in 2020 as the Covid-19 pandemic led to supply chain disruptions and a global shortage of semiconductors.
It also saw chip manufacturing as a front in its tech war with China. In October, the Biden administration banned Chinese companies from buying advanced chips and chip-making equipment or from hiring American citizens or green card holders for chip development.

Taiwan, a self-ruled island that mainland China claims as its own territory, is home to more than 90 per cent of the world’s most advanced chips manufacturing capacity. TSMC provides more than 60 per cent of the chips needed by mainland China’s electronic industry.

A recent op-ed by China’s state-owned tabloid Global Times warned TSMC of US “selfishness”, which it claimed would “hollow out” Taiwan’s economy.

“The US is trying to gain unfair advantage and decouple its chip supply chain from Asia through non-market means”, it contended.
“Washington’s selfish policies and trade protectionism will undermine the development of Taiwan’s semiconductor industry and result in an erosion of manufacturing”. South China Morning Post