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TSMC can help 'stabilize' U.S.-China relations: chairman

Mark Liu argues thriving chip industry will have positive effect on geopolitics

CHENG TING-FANG, Nikkei Asia chief tech correspondent

June 6, 2023

TSMC Chairman Mark Liu briefs shareholders at the company's annual general meeting on June 6 in Hsinchu, Taiwan.

HSINCHU, Taiwan -- The chairman of Taiwan Semiconductor Manufacturing Co. on Tuesday sought to ease concerns that U.S.-China tensions pose a threat to the world's largest contract chipmaker, arguing that his company can in fact play a role in improving relations between the two superpowers.

TSMC Chairman Mark Liu said if Taiwan's chip industry as a whole -- the second-biggest in the world by revenue after the U.S. -- continues to thrive, it would have a positive effect on geopolitics.

"If China and the U.S. both think they cannot live without TSMC and our chips ... they would thoroughly consider things [before making any moves]. TSMC and Taiwan's flagship chip industry can, in turn, play a role in stabilizing the tension between U.S. and China," Liu told shareholders at the company's annual general meeting.

"We cannot solve the tension, for sure, but hope our key role [in the supply chain] can calm down both sides."

His remarks follow the recent sale by renowned U.S. investor Warren Buffett of his stake in TSMC, citing geopolitical tensions as a "consideration" in the surprise move.

TSMC added that according to its own survey of clients, customers' trust in the company is increasing. "Nvidia's CEO Jensen Huang said chip production with TSMC is perfectly safe, which shows our customers' trust in us," said Liu. "It's not worthwhile to only listen to politicians on this."

But TSMC also confirmed that it is still working with customers to expand production in the U.S., Japan and China. The chipmaker said it is now "feeling good" about the outlook for building its first-ever chip plant in Germany.

"After the Ukraine-Russia war, we really saw a dramatic change in Europe. They started to have very strong incentives and became extremely active in hoping some semiconductors could be made locally. This demand is coming mainly from the local automotive supply chain," Liu said, adding that some clients in that segment hope to have "small stakes" in the new plant if it materializes.

He added that his company expects to add a second phase to the plant it is building in Kumamoto, Japan, saying it will also focus on less advanced, specialty technologies. Liu added, however, that the chipmaker is still in talks with the Japanese government on subsidies for the expansion.

C.C. Wei, TSMC's CEO, said the company is still committed over the long term to keeping the majority of its most advanced production capacity in Taiwan.

"The majority of our production capacity for 3-nanometer, and in the future 2 nm and 1.4 nm, will still be in Taiwan," Wei said.

The smaller the nanometer size, in general, the more advanced and powerful the chips are. Currently the most advanced chips are built with 3 nm technology. Only TSMC, Samsung and Intel are capable of making such cutting-edge chips.

Liu added that TSMC is also enjoying a boost from artificial intelligence. The company has received many rush orders for chip production and advanced chip packaging for generative AI needs, such as to run the data centers that enable the hugely popular chatbot ChatGPT, he said. "We are rushing to increase our advanced chip packaging capacity, mainly to meet chip demand for generative AI, too."

The chairman said he expects that in the future AI computing will not be confined to data centers but will also be able to run on "edge" devices like smartphones and personal computers.

Liu also mentioned Apple's recently unveiled mixed reality device, the Vision Pro, saying it is likely to give the market for such devices boost. But whether they ultimately become a great success depends not only on the technology but on applications, he said.

Virtual reality and mixed-reality gadgets have existed for a very long time, but the "user experiences and applications have yet to mature, and the shipments are not big," he added.

"People have great expectations for Apple's devices because Apple is known to be good at bringing all application developers [in]to its ecosystem," Liu said.

The chairman said TSMC will not miss the mixed-reality market boom, if there is one, as the chipmaker can help build microdisplays as well as low-power computing core chips for such devices.

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