On Wednesday, May 8th, US Secretary of Commerce Gina Raimondo stated that if Beijing were to invade Taiwan and seize the chip manufacturer TSMC, it would have a “devastating” impact on the US economy.
Raimondo made these remarks while attending a hearing at the US House of Representatives when asked about the implications of a potential Chinese Communist Party invasion of Taiwan.
“This would be absolutely devastating,” Raimondo said, but she declined to comment on how or whether it would happen.
“Currently, 92% of America’s leading chips are purchased from TSMC in Taiwan,” she added.
In April, Raimondo announced that the US Department of Commerce would provide a $6.6 billion subsidy to TSMC’s US subsidiary for high-end chip production in Phoenix, Arizona, as well as up to $5 billion in low-cost government loans.
When announcing the initial contract, the Department of Commerce stated that TSMC had agreed to increase its investment from $25 billion to $65 billion and build a third chip plant in Arizona by 2030.
The Department of Commerce announced that TSMC would produce the world’s most advanced 2-nanometer technology chips at the second Arizona plant, with mass production expected to begin in 2028.
TSMC is the world’s largest chip foundry, supplying companies like Apple and NVIDIA. The Department of Commerce stated that TSMC is expected to start mass production at its first US plant in the first half of 2025.
In 2022, Congress approved the Chips and Science Act, providing $52.7 billion in research and manufacturing subsidies to increase domestic semiconductor production and reduce America’s reliance on Asian chips. Congress also approved $75 billion in government loan authorizations.
A 2023 US government document estimated that a significant disruption in Taiwan’s manufacturing could lead to a 59% increase in chip prices in the US, with domestic downstream manufacturers having to bear the cost.
(Translated and revised from a report by Reuters)