Forward-looking: This week, the founder of the world’s leading chip manufacturer commented on geopolitical factors driving changes in the semiconductor industry. While he voiced support for recent US sanctions on Chinese chip imports, his comments mostly framed issues based on whether they benefitted TSMC.
At the CommonWealth Semiconductor Forum, TSMC founder Morris Chang joined a discussion about segmentation and specialization in the chip industry this week. He supports recent US sanctions in China but expressed doubts about the country’s efforts to boost domestic semiconductor manufacturing.
Chang estimates chip manufacturing in mainland China is about five or six years behind Taiwan and applauds the American sanctions because they will keep it that way. The sanctions, enacted over the last year, are designed to restrict China’s development of supercomputers and other hardware for military purposes.
Last year, the US imposed import restrictions on various Chinese companies and other entities with links to the country’s military. The goal is to limit Chinese logic chips to the 14-nanometer node, DRAM to 18nm, and 3D NAND flash to 128 layers. The most recent Chinese companies sanctioned from dealing directly with US sellers are Loongson and Inspur. The Netherlands also recently agreed to curb its vital lithography equipment exports to China.
The sanctions so far have caused China’s chip imports in the first two months of 2023 to fall by 27 percent – more than in all of 2022. Meanwhile, Taiwan’s exports rose by 18 percent in 2022.
Furthermore, the Chips Act, which the US signed into law last year, is supposed to facilitate the establishment of semiconductor fabs in the US to reduce the country’s dependence on foreign computer hardware. However, Chang doubts the move’s benefits and the speed at which its desired effects may occur.
Chip Wars author Chris Miller spoke with the 91-year-old founder and observed that the semiconductor industry is diversifying between more countries to reduce interdependence. He thinks the process will be slow, which Chang attributes to certain deep-rooted qualities in a handful of nations.
Chang believes countries like Taiwan, South Korea, and Japan are ahead in manufacturing because of those countries’ work cultures. Conversely, he admits that the US has great designers (possibly referring to those at Apple) due to their proximity to the market’s needs.
Additionally, Chang warns that the segmentation could increase costs and slow down overall chip development. The TSMC founder credits plummeting semiconductor costs over the last several decades with their ubiquity today, highlighting how US production costs could double prices compared to Taiwan. Chang also dislikes how Taiwan is being left out of “Friendshoring,” a practice whereby countries orient their supply chains alongside political and economic allies.