Taiwanese semiconductor giant TSMC, a key supplier to big tech companies such as Nvidia and Apple, announced that it had entered into talks with some of its customers about the possibility of moving its chip manufacturing plants off the island. This comes at a time when tensions between China and Taiwan have increased, especially following Beijing’s recent military exercises around Taiwan following the inauguration of President Lai Ching-te, whom China considers a separatist.
Despite these discussions, TSMC President CC Wei stressed that moving the company’s chip factories out of Taiwan would be impractical. “Instability across the Taiwan Strait is a consideration for the supply chain, but I want to say that we don’t want wars,” Wei said at the company’s annual general meeting. He noted that 80-90% of TSMC’s production capacity is located in Taiwan, making its offshoring unfeasible.
Wei did not disclose which clients TSMC had spoken to about the possible move. However, he mentioned that TSMC has been facing an influx of orders for high-end chips, particularly those used in generative artificial intelligence tools and services. Wei highlighted a discussion with OpenAI, the creator of ChatGPT, over the supply of AI chips, and described OpenAI’s requests as “too aggressive.”
TSMC considers price increase in AI chip production amid geopolitical tensions
A source familiar with the matter revealed that OpenAI CEO Sam Altman had proposed a partnership with TSMC to build approximately three dozen factories to meet growing demand for silicon. However, TSMC officials indicated that this number of factories was excessive and expressed concern about operating them at the necessary 80% capacity. TSMC’s forecasts at the time did not support demand for such a large number of new factories.
The topic of possible war and its impact on the chip supply chain has been notably absent from discussions at the Computex technology fair in Taipei, except when brought up by journalists. Frank Huang, President of Powerchip Semiconductor Manufacturing, commented: “No one is worried about this yet,” and underlined Taiwan’s critical role in the development of AI.
Similarly, AMD CEO Lisa Su affirmed the importance of Taiwan in the global chip supply chain, emphasizing the importance of a global ecosystem. “We do much of our manufacturing here with key suppliers like TSMC…. And we also have a number of partners who help us build the ecosystem here in Taiwan,” she stated at Computex.
Despite geopolitical tensions, industry leaders remain confident that Taiwan will remain critical to the semiconductor industry.
