TSMC's U.S. expansion plans are set to be emulated by suppliers, but potential delays may stretch these implementations over multiple years, according to the Ministry of Economic Affairs.
Unleashing the Might: Taiwanese Suppliers to TSMC Eyeing a US Shift with a Seven to Eight Year Timeline
Gear up, America! Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC) are eyeballing a move to the US, following in TSMC's footsteps, but the shift might take a good seven to eight years, as suggested by Minister of Economic Affairs J.W. Kuo.
During a recent grilling by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting, Kuo explained that with TSMC's limited current production volume, it's unlikely to trigger an immediate exodus of its supply chain to the US. However, if TSMC significantly boosts its production, suppliers may tread the path to the US, according to Kuo.
Last month, TSMC pledged an additional $100 billion to its existing $65 billion investment in Arizona, aiming to construct three more advanced wafer fabs, two sophisticated IC packaging plants, and one research and development center. Currently, TSMC’s ventures in the US stand at a whopping $165 billion.
Apart from this potential shift among TSMC's suppliers, other industries such as printed circuit board makers and server producers are reportedly ready to expand production capacity in their existing US plants to meet growing American demand.
In addition to the impending supplier movement, the US government might instigate the appreciation of the New Taiwan dollar against the greenback to bolster the competitive edge of manufactured goods in the US. Premier Cho Jung-tai admits that maintaining the stability of the foreign exchange rate might be a significant challenge.
While TSMC projects only 6% of its global production capacity in the US by 2030, the supplier migration to America strengthens the economic ties between the two nations, complicating geopolitical calculations about semiconductor dependence. As TSMC constructs more wafer fabs in the US, localized supplier ecosystems may become a strategic response to reduce reliance on Asia-based manufacturing but may also face cost challenges (labor, regulatory compliance). Moreover, advanced packaging/R&D facilities in the US could potentially reshape global semiconductor R&D dynamics, accelerating knowledge transfer to American partners.
It's a strategic dance, and Taiwanese suppliers are getting ready to tango in the US, but it's a long, seven-to-eight-year waltz!
By 2028, Taiwanese suppliers, driven by TSMC's expansion in the US, might initiate a relocation of their wafer manufacturing operations, following a timeline similar to TSMC's seven to eight years. This potential movement could be influenced by the significant technological advancements coming from TSMC's additional investments in the US. The KMT, aware of the slower pace of this shifts, will likely monitor the situation closely.
