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Taiwan Firms Step Up US Investments to Mitigate Chip Concerns

·3 min read

(Bloomberg) -- A Taiwanese chip company announced a $5 billion investment in the US this week and another is planning a research center in the Midwest. The back-to-back announcements may help allay concerns among American politicians and business leaders that the country is relying too much on Taiwan for production of semiconductors.

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Silicon-wafer maker GlobalWafers Co. said on Monday that it plans to build a plant that will be the biggest of its kind on American soil with construction to start later this year. Chip designer MediaTek Inc., a rival to Qualcomm Inc., said on Tuesday it will create a research center in partnership with Purdue University in Indiana.

“With the global chips shortage and ongoing geopolitical concerns, GlobalWafers is taking this opportunity to address the United States semiconductor supply chain resiliency issue by building an advanced node, state-of-the-art, 300-millimeter silicon wafer factory,” GlobalWafers Chairwoman and Chief Executive Officer Doris Hsu said in a statement on Monday. Hsu told Taiwan media that 80% of its production capacity at the yet-to-be-built Texas plant has been booked.

US Commerce Secretary Gina Raimondo has said dependence on Taiwan puts her country in a fragile situation. Former Google chief Eric Schmidt this month amplified concerns that it is a national security risk for America to rely on Taiwan and other Asian countries for the majority of its chip supply. Russia’s attack on Ukraine has heightened such worries, as some see the war increasing the chances that China will seek to invade Taiwan.

GlobalWafers and MediaTek are following in the footsteps of Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, which is building a $12 billion plant in Arizona to diversify its production capacity and satisfy Washington’s demand that some chips for national security use should be made domestically.

Even after TSMC first announced its plans for the Arizona plant, US officials and business leaders continued to warn that it is too risky for the world’s chip production to be centralized in Taiwan. They have ramped up their rhetoric in recent months as part of their campaign to get lawmakers to approve $52 billion in federal grants to aid domestic manufacturing.

China sees self-governing, democratic Taiwan as part of its own territory, and hasn’t ruled out taking the island through force. A senior Chinese economist at a government-run research group this month called on authorities to seize TSMC if the US hits China with sanctions on par with those leveled against Russia.

While Taiwan hasn’t exactly addressed what it may do about chip supply should China invade, Taiwanese officials have repeatedly tried to reassure Washington that the island will be a stable supply chain partner to the US.

“Taiwan is the US’s most important partner when it comes to democratic values and industry development,” Taiwan’s Minister of National Development Council Kung Ming-hsin said during an event hosted by the Global Taiwan Institute in Washington, D.C., on Monday. The two sides can deepen partnerships in chip design and research and development capabilities, he said through his presentation materials.

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